Correlation Between Atlas Copco and Fanuc
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Fanuc 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 Fanuc 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 Fanuc, you can compare the effects of market volatilities on Atlas Copco and Fanuc 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 Fanuc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Fanuc.
Diversification Opportunities for Atlas Copco and Fanuc
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Atlas and Fanuc is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Fanuc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanuc 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 Fanuc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanuc has no effect on the direction of Atlas Copco i.e., Atlas Copco and Fanuc go up and down completely randomly.
Pair Corralation between Atlas Copco and Fanuc
If you would invest 1,576 in Atlas Copco AB on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Atlas Copco AB or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Fanuc
Performance |
| Timeline |
| Atlas Copco AB |
| Fanuc |
Atlas Copco and Fanuc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Fanuc
The main advantage of trading using opposite Atlas Copco and Fanuc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Fanuc 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 Fanuc will offset losses from the drop in Fanuc's long position.The idea behind Atlas Copco AB and Fanuc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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