Correlation Between Investor and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Investor 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 Investor and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Atlas Copco AB, you can compare the effects of market volatilities on Investor 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 Investor with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Atlas Copco.
Diversification Opportunities for Investor and Atlas Copco
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investor and Atlas is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser 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 Investor 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 Investor AB ser 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 Investor i.e., Investor and Atlas Copco go up and down completely randomly.
Pair Corralation between Investor and Atlas Copco
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.57 times more return on investment than Atlas Copco. However, Investor AB ser is 1.75 times less risky than Atlas Copco. It trades about -0.24 of its potential returns per unit of risk. Atlas Copco AB is currently generating about -0.17 per unit of risk. If you would invest 30,749 in Investor AB ser on August 29, 2024 and sell it today you would lose (1,269) from holding Investor AB ser or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. Atlas Copco AB
Performance |
| Timeline |
| Investor AB ser |
| Atlas Copco AB |
Investor and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Atlas Copco
The main advantage of trading using opposite Investor and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor 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.| Investor vs. Norva24 Group AB | Investor vs. KABE Group AB | Investor vs. IAR Systems Group | Investor vs. Clinical Laserthermia Systems |
| Atlas Copco vs. Sandvik AB | Atlas Copco vs. AB SKF | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. ASSA ABLOY 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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