Correlation Between Skandinaviska Enskilda and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda 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 Skandinaviska Enskilda and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skandinaviska Enskilda Banken and Atlas Copco AB, you can compare the effects of market volatilities on Skandinaviska Enskilda 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 Skandinaviska Enskilda with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Atlas Copco.
Diversification Opportunities for Skandinaviska Enskilda and Atlas Copco
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skandinaviska and Atlas is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken 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 Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken 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 Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Atlas Copco go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Atlas Copco
Assuming the 90 days trading horizon Skandinaviska Enskilda is expected to generate 1.15 times less return on investment than Atlas Copco. But when comparing it to its historical volatility, Skandinaviska Enskilda Banken is 1.06 times less risky than Atlas Copco. It trades about 0.05 of its potential returns per unit of risk. Atlas Copco AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,544 in Atlas Copco AB on August 26, 2024 and sell it today you would earn a total of 2,776 from holding Atlas Copco AB or generate 22.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Atlas Copco AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Atlas Copco AB |
Skandinaviska Enskilda and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Atlas Copco
The main advantage of trading using opposite Skandinaviska Enskilda and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda 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.| Skandinaviska Enskilda vs. Skandinaviska Enskilda Banken | Skandinaviska Enskilda vs. Swedbank AB | Skandinaviska Enskilda vs. TF Bank 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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