Correlation Between Atlas Copco and Siemens AG
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Siemens 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 Siemens 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 Siemens AG Class, you can compare the effects of market volatilities on Atlas Copco and Siemens 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 Siemens AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Siemens AG.
Diversification Opportunities for Atlas Copco and Siemens AG
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Atlas and Siemens is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Siemens AG Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG Class 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 Siemens AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens AG Class has no effect on the direction of Atlas Copco i.e., Atlas Copco and Siemens AG go up and down completely randomly.
Pair Corralation between Atlas Copco and Siemens AG
Assuming the 90 days horizon Atlas Copco AB is expected to generate 0.9 times more return on investment than Siemens AG. However, Atlas Copco AB is 1.12 times less risky than Siemens AG. It trades about 0.09 of its potential returns per unit of risk. Siemens AG Class is currently generating about 0.01 per unit of risk. If you would invest 1,140 in Atlas Copco AB on August 25, 2024 and sell it today you would earn a total of 436.00 from holding Atlas Copco AB or generate 38.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco AB vs. Siemens AG Class
Performance |
| Timeline |
| Atlas Copco AB |
| Siemens AG Class |
Atlas Copco and Siemens AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Siemens AG
The main advantage of trading using opposite Atlas Copco and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Siemens 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 Siemens AG will offset losses from the drop in Siemens 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 |
| Siemens AG vs. Aumann AG | Siemens AG vs. Arista Power | Siemens AG vs. Atlas Copco AB | Siemens 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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