Correlation Between Atlas Copco and ITAB Shop
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and ITAB Shop 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 ITAB Shop 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 ITAB Shop Concept, you can compare the effects of market volatilities on Atlas Copco and ITAB Shop 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 ITAB Shop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and ITAB Shop.
Diversification Opportunities for Atlas Copco and ITAB Shop
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlas and ITAB is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and ITAB Shop Concept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITAB Shop Concept 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 ITAB Shop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITAB Shop Concept has no effect on the direction of Atlas Copco i.e., Atlas Copco and ITAB Shop go up and down completely randomly.
Pair Corralation between Atlas Copco and ITAB Shop
Assuming the 90 days trading horizon Atlas Copco AB is expected to generate 0.59 times more return on investment than ITAB Shop. However, Atlas Copco AB is 1.71 times less risky than ITAB Shop. It trades about -0.17 of its potential returns per unit of risk. ITAB Shop Concept is currently generating about -0.46 per unit of risk. If you would invest 16,085 in Atlas Copco AB on August 28, 2024 and sell it today you would lose (850.00) from holding Atlas Copco AB or give up 5.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Atlas Copco AB vs. ITAB Shop Concept
Performance |
| Timeline |
| Atlas Copco AB |
| ITAB Shop Concept |
Atlas Copco and ITAB Shop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and ITAB Shop
The main advantage of trading using opposite Atlas Copco and ITAB Shop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, ITAB Shop 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 ITAB Shop will offset losses from the drop in ITAB Shop's long position.| Atlas Copco vs. Sandvik AB | Atlas Copco vs. AB SKF | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. ASSA ABLOY AB |
| ITAB Shop vs. Inwido AB | ITAB Shop vs. Elanders AB | ITAB Shop vs. Byggmax Group AB | ITAB Shop vs. Dustin Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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