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
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sandvik and Atlas is 0.22. 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 horizon Sandvik AB is expected to under-perform the Atlas Copco. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sandvik AB is 1.31 times less risky than Atlas Copco. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Atlas Copco AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,728 in Atlas Copco AB on August 29, 2024 and sell it today you would lose (130.00) from holding Atlas Copco AB or give up 7.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| 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. Schneider Electric SA | Sandvik AB vs. KONE Oyj | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Sandvik AB ADR |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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