Correlation Between Atlas Copco and KONE Oyj
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and KONE Oyj 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 KONE Oyj 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 KONE Oyj, you can compare the effects of market volatilities on Atlas Copco and KONE Oyj 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 KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and KONE Oyj.
Diversification Opportunities for Atlas Copco and KONE Oyj
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlas and KONE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj 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 KONE Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KONE Oyj has no effect on the direction of Atlas Copco i.e., Atlas Copco and KONE Oyj go up and down completely randomly.
Pair Corralation between Atlas Copco and KONE Oyj
Assuming the 90 days horizon Atlas Copco AB is expected to generate 1.58 times more return on investment than KONE Oyj. However, Atlas Copco is 1.58 times more volatile than KONE Oyj. It trades about 0.05 of its potential returns per unit of risk. KONE Oyj is currently generating about 0.02 per unit of risk. If you would invest 944.00 in Atlas Copco AB on August 26, 2024 and sell it today you would earn a total of 654.00 from holding Atlas Copco AB or generate 69.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.07% |
| Values | Daily Returns |
Atlas Copco AB vs. KONE Oyj
Performance |
| Timeline |
| Atlas Copco AB |
| KONE Oyj |
Atlas Copco and KONE Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and KONE Oyj
The main advantage of trading using opposite Atlas Copco and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, KONE Oyj 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 KONE Oyj will offset losses from the drop in KONE Oyj's long position.| Atlas Copco vs. Aumann AG | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. Arista Power | Atlas Copco vs. Atlas Copco AB |
| KONE Oyj vs. Spirax Sarco Engineering PLC | KONE Oyj vs. Atlas Copco ADR | KONE Oyj vs. Vestas Wind Systems | KONE Oyj vs. IDEX Corporation |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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