Correlation Between Sandvik AB and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Sandvik 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 Sandvik 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 Sandvik AB and Atlas Copco AB, you can compare the effects of market volatilities on Sandvik 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 Sandvik AB with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandvik AB and Atlas Copco.
Diversification Opportunities for Sandvik AB and Atlas Copco
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sandvik and Atlas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik 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 Sandvik 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 Sandvik 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 Sandvik AB i.e., Sandvik AB and Atlas Copco go up and down completely randomly.
Pair Corralation between Sandvik AB and Atlas Copco
Assuming the 90 days trading horizon Sandvik AB is expected to generate 1.29 times more return on investment than Atlas Copco. However, Sandvik AB is 1.29 times more volatile than Atlas Copco AB. It trades about 0.2 of its potential returns per unit of risk. Atlas Copco AB is currently generating about 0.15 per unit of risk. If you would invest 20,450 in Sandvik AB on November 7, 2024 and sell it today you would earn a total of 1,910 from holding Sandvik AB or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandvik AB vs. Atlas Copco AB
Performance |
| Timeline |
| Sandvik AB |
| Atlas Copco AB |
Sandvik AB and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandvik AB and Atlas Copco
The main advantage of trading using opposite Sandvik AB and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandvik 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.| Sandvik AB vs. AB SKF | Sandvik AB vs. Alfa Laval AB | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Boliden AB |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |