Correlation Between Atlas Copco and Transtema Group
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Transtema Group 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 Transtema Group 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 Transtema Group AB, you can compare the effects of market volatilities on Atlas Copco and Transtema Group 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 Transtema Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Transtema Group.
Diversification Opportunities for Atlas Copco and Transtema Group
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Atlas and Transtema is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Transtema Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transtema Group 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 Transtema Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transtema Group AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Transtema Group go up and down completely randomly.
Pair Corralation between Atlas Copco and Transtema Group
Assuming the 90 days trading horizon Atlas Copco AB is expected to under-perform the Transtema Group. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Copco AB is 2.22 times less risky than Transtema Group. The stock trades about -0.1 of its potential returns per unit of risk. The Transtema Group AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,484 in Transtema Group AB on August 25, 2024 and sell it today you would earn a total of 70.00 from holding Transtema Group AB or generate 4.72% 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. Transtema Group AB
Performance |
| Timeline |
| Atlas Copco AB |
| Transtema Group AB |
Atlas Copco and Transtema Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Transtema Group
The main advantage of trading using opposite Atlas Copco and Transtema Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Transtema Group 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 Transtema Group will offset losses from the drop in Transtema Group'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 |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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