Correlation Between Atlas Copco and Weichai Power
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Weichai Power 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 Weichai Power 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 Weichai Power Co, you can compare the effects of market volatilities on Atlas Copco and Weichai Power 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 Weichai Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Weichai Power.
Diversification Opportunities for Atlas Copco and Weichai Power
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Atlas and Weichai is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Weichai Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Power 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 Weichai Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Power has no effect on the direction of Atlas Copco i.e., Atlas Copco and Weichai Power go up and down completely randomly.
Pair Corralation between Atlas Copco and Weichai Power
If you would invest 161.00 in Weichai Power Co on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Weichai Power Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Atlas Copco AB vs. Weichai Power Co
Performance |
| Timeline |
| Atlas Copco AB |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Atlas Copco and Weichai Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Weichai Power
The main advantage of trading using opposite Atlas Copco and Weichai Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Weichai Power 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 Weichai Power will offset losses from the drop in Weichai Power's long position.| Atlas Copco vs. Parker Hannifin | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Dover | Atlas Copco vs. Illinois Tool Works |
| Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Shanghai Electric Group | Weichai Power vs. American Superconductor | Weichai Power 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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