Correlation Between Epiroc AB and Komatsu
Can any of the company-specific risk be diversified away by investing in both Epiroc AB and Komatsu 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 Epiroc AB and Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epiroc AB and Komatsu, you can compare the effects of market volatilities on Epiroc AB and Komatsu 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 Epiroc AB with a short position of Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epiroc AB and Komatsu.
Diversification Opportunities for Epiroc AB and Komatsu
Very weak diversification
The 3 months correlation between Epiroc and Komatsu is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Epiroc AB and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu and Epiroc 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 Epiroc AB are associated (or correlated) with Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Epiroc AB i.e., Epiroc AB and Komatsu go up and down completely randomly.
Pair Corralation between Epiroc AB and Komatsu
Assuming the 90 days horizon Epiroc AB is expected to generate 9.84 times less return on investment than Komatsu. In addition to that, Epiroc AB is 1.26 times more volatile than Komatsu. It trades about 0.02 of its total potential returns per unit of risk. Komatsu is currently generating about 0.22 per unit of volatility. If you would invest 2,694 in Komatsu on September 13, 2024 and sell it today you would earn a total of 123.00 from holding Komatsu or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Epiroc AB vs. Komatsu
Performance |
| Timeline |
| Epiroc AB |
| Komatsu |
Epiroc AB and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epiroc AB and Komatsu
The main advantage of trading using opposite Epiroc AB and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epiroc AB position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Epiroc AB vs. Komatsu | Epiroc AB vs. Alamo Group | Epiroc AB vs. Hitachi Construction Machinery | Epiroc AB vs. Komatsu |
| Komatsu vs. HUMANA INC | Komatsu vs. Barloworld Ltd ADR | Komatsu vs. Morningstar Unconstrained Allocation | Komatsu vs. Thrivent High Yield |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |