Correlation Between Atlas Copco and SMC Corp
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and SMC Corp 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 SMC Corp 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 SMC Corp Japan, you can compare the effects of market volatilities on Atlas Copco and SMC Corp 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 SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and SMC Corp.
Diversification Opportunities for Atlas Copco and SMC Corp
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Atlas and SMC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and SMC Corp Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp Japan 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 SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp Japan has no effect on the direction of Atlas Copco i.e., Atlas Copco and SMC Corp go up and down completely randomly.
Pair Corralation between Atlas Copco and SMC Corp
Assuming the 90 days horizon Atlas Copco AB is expected to generate 0.91 times more return on investment than SMC Corp. However, Atlas Copco AB is 1.1 times less risky than SMC Corp. It trades about 0.25 of its potential returns per unit of risk. SMC Corp Japan is currently generating about 0.0 per unit of risk. If you would invest 1,531 in Atlas Copco AB on November 2, 2024 and sell it today you would earn a total of 116.00 from holding Atlas Copco AB or generate 7.58% 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. SMC Corp Japan
Performance |
| Timeline |
| Atlas Copco AB |
| SMC Corp Japan |
Atlas Copco and SMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and SMC Corp
The main advantage of trading using opposite Atlas Copco and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, SMC Corp 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 SMC Corp will offset losses from the drop in SMC Corp's long position.| Atlas Copco vs. Standex International | Atlas Copco vs. Intevac | Atlas Copco vs. Thermon Group Holdings | Atlas Copco vs. Enpro Industries |
| SMC Corp vs. Schneider Electric SE | SMC Corp vs. Atlas Copco AB | SMC Corp vs. Fanuc | SMC Corp vs. Sandvik 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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