Correlation Between Atlas Copco and Aumann AG
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Aumann AG 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 Aumann AG 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 Aumann AG, you can compare the effects of market volatilities on Atlas Copco and Aumann AG 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 Aumann AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Aumann AG.
Diversification Opportunities for Atlas Copco and Aumann AG
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Atlas and Aumann is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG 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 Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of Atlas Copco i.e., Atlas Copco and Aumann AG go up and down completely randomly.
Pair Corralation between Atlas Copco and Aumann AG
Assuming the 90 days horizon Atlas Copco is expected to generate 1.49 times less return on investment than Aumann AG. But when comparing it to its historical volatility, Atlas Copco AB is 1.49 times less risky than Aumann AG. It trades about 0.22 of its potential returns per unit of risk. Aumann AG is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Aumann AG on November 3, 2024 and sell it today you would earn a total of 95.00 from holding Aumann AG or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Aumann AG
Performance |
| Timeline |
| Atlas Copco AB |
| Aumann AG |
Atlas Copco and Aumann AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Aumann AG
The main advantage of trading using opposite Atlas Copco and Aumann AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Aumann AG 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 Aumann AG will offset losses from the drop in Aumann AG's long position.| Atlas Copco vs. Amaero International | Atlas Copco vs. Arista Power | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. American Commerce Solutions |
| Aumann AG vs. Alfa Laval AB | Aumann AG vs. Arista Power | Aumann AG vs. Atlas Copco AB | Aumann AG vs. American Commerce Solutions |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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