Correlation Between Atlas Copco and Image Systems
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Image Systems at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Atlas Copco and Image Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Copco AB and Image Systems AB, you can compare the effects of market volatilities on Atlas Copco and Image Systems and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Atlas Copco with a short position of Image Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Image Systems.
Diversification Opportunities for Atlas Copco and Image Systems
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Atlas and Image is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Image Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Systems AB and Atlas Copco is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Atlas Copco AB are associated (or correlated) with Image Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Systems AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Image Systems go up and down completely randomly.
Pair Corralation between Atlas Copco and Image Systems
Assuming the 90 days trading horizon Atlas Copco is expected to generate 1.5 times less return on investment than Image Systems. But when comparing it to its historical volatility, Atlas Copco AB is 2.37 times less risky than Image Systems. It trades about 0.04 of its potential returns per unit of risk. Image Systems AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 166.00 in Image Systems AB on August 31, 2024 and sell it today you would earn a total of 32.00 from holding Image Systems AB or generate 19.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Image Systems AB
Performance |
| Timeline |
| Atlas Copco AB |
| Image Systems AB |
Atlas Copco and Image Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Image Systems
The main advantage of trading using opposite Atlas Copco and Image Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Image Systems can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Image Systems will offset losses from the drop in Image Systems' long position.| Atlas Copco vs. AB SKF | Atlas Copco vs. Sandvik AB | Atlas Copco vs. Husqvarna AB | Atlas Copco vs. Skanska AB |
| Image Systems vs. Precise Biometrics AB | Image Systems vs. Anoto Group AB | Image Systems vs. Bong AB | Image Systems vs. Episurf Medical AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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