Correlation Between Boliden AB and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Boliden AB and Atlas Copco 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 Boliden AB and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boliden AB and Atlas Copco AB, you can compare the effects of market volatilities on Boliden AB and Atlas Copco 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 Boliden AB with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boliden AB and Atlas Copco.
Diversification Opportunities for Boliden AB and Atlas Copco
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boliden and Atlas is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB and Boliden AB 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 Boliden AB are associated (or correlated) with Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Boliden AB i.e., Boliden AB and Atlas Copco go up and down completely randomly.
Pair Corralation between Boliden AB and Atlas Copco
Assuming the 90 days trading horizon Boliden AB is expected to generate 1.52 times less return on investment than Atlas Copco. In addition to that, Boliden AB is 1.2 times more volatile than Atlas Copco AB. It trades about 0.15 of its total potential returns per unit of risk. Atlas Copco AB is currently generating about 0.27 per unit of volatility. If you would invest 17,165 in Atlas Copco AB on November 3, 2024 and sell it today you would earn a total of 1,455 from holding Atlas Copco AB or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boliden AB vs. Atlas Copco AB
Performance |
| Timeline |
| Boliden AB |
| Atlas Copco AB |
Boliden AB and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boliden AB and Atlas Copco
The main advantage of trading using opposite Boliden AB and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| Boliden AB vs. Sandvik AB | Boliden AB vs. AB SKF | Boliden AB vs. Alfa Laval AB | Boliden AB vs. AB Electrolux |
| Atlas Copco vs. Sandvik AB | Atlas Copco vs. ASSA ABLOY AB | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. AB SKF |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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