Correlation Between Atlas Copco and Aalberts
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Aalberts 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 Aalberts 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 Aalberts NV, you can compare the effects of market volatilities on Atlas Copco and Aalberts 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 Aalberts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Aalberts.
Diversification Opportunities for Atlas Copco and Aalberts
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Atlas and Aalberts is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Aalberts NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts NV 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 Aalberts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts NV has no effect on the direction of Atlas Copco i.e., Atlas Copco and Aalberts go up and down completely randomly.
Pair Corralation between Atlas Copco and Aalberts
Assuming the 90 days horizon Atlas Copco AB is expected to generate 0.73 times more return on investment than Aalberts. However, Atlas Copco AB is 1.37 times less risky than Aalberts. It trades about 0.11 of its potential returns per unit of risk. Aalberts NV is currently generating about 0.03 per unit of risk. If you would invest 554.00 in Atlas Copco AB on September 3, 2024 and sell it today you would earn a total of 1,022 from holding Atlas Copco AB or generate 184.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 50.51% |
| Values | Daily Returns |
Atlas Copco AB vs. Aalberts NV
Performance |
| Timeline |
| Atlas Copco AB |
| Aalberts NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Atlas Copco and Aalberts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Aalberts
The main advantage of trading using opposite Atlas Copco and Aalberts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Aalberts 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 Aalberts will offset losses from the drop in Aalberts' long position.| Atlas Copco vs. Amaero International | Atlas Copco vs. Arista Power | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. American Commerce Solutions |
| Aalberts vs. Amaero International | Aalberts vs. Atlas Copco AB | Aalberts vs. Arista Power | Aalberts vs. Alfa Laval 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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