Correlation Between Atlas Copco and Shanghai Electric
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Shanghai Electric 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 Shanghai Electric 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 Shanghai Electric Group, you can compare the effects of market volatilities on Atlas Copco and Shanghai Electric 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 Shanghai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Shanghai Electric.
Diversification Opportunities for Atlas Copco and Shanghai Electric
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Atlas and Shanghai is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Shanghai Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Electric 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 Shanghai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Electric has no effect on the direction of Atlas Copco i.e., Atlas Copco and Shanghai Electric go up and down completely randomly.
Pair Corralation between Atlas Copco and Shanghai Electric
Assuming the 90 days horizon Atlas Copco is expected to generate 2.34 times less return on investment than Shanghai Electric. But when comparing it to its historical volatility, Atlas Copco AB is 2.52 times less risky than Shanghai Electric. It trades about 0.05 of its potential returns per unit of risk. Shanghai Electric Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 466.00 in Shanghai Electric Group on September 1, 2024 and sell it today you would earn a total of 297.00 from holding Shanghai Electric Group or generate 63.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Atlas Copco AB vs. Shanghai Electric Group
Performance |
| Timeline |
| Atlas Copco AB |
| Shanghai Electric |
Atlas Copco and Shanghai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Shanghai Electric
The main advantage of trading using opposite Atlas Copco and Shanghai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Shanghai Electric 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 Shanghai Electric will offset losses from the drop in Shanghai Electric's long position.| Atlas Copco vs. GE Aerospace | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Siemens AG Class | Atlas Copco vs. Parker Hannifin |
| Shanghai Electric vs. Xinjiang Goldwind Science | Shanghai Electric vs. American Superconductor | Shanghai Electric vs. Cummins |
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 CEOs Directory module to screen CEOs from public companies around the world.
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