Correlation Between THK Co and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both THK Co 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 THK Co and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THK Co Ltd and Atlas Copco AB, you can compare the effects of market volatilities on THK Co 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 THK Co with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of THK Co and Atlas Copco.
Diversification Opportunities for THK Co and Atlas Copco
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THK and Atlas is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding THK Co Ltd 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 THK Co 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 THK Co Ltd 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 THK Co i.e., THK Co and Atlas Copco go up and down completely randomly.
Pair Corralation between THK Co and Atlas Copco
Assuming the 90 days horizon THK Co is expected to generate 1.25 times less return on investment than Atlas Copco. In addition to that, THK Co is 1.24 times more volatile than Atlas Copco AB. It trades about 0.05 of its total potential returns per unit of risk. Atlas Copco AB is currently generating about 0.07 per unit of volatility. If you would invest 945.00 in Atlas Copco AB on September 12, 2024 and sell it today you would earn a total of 508.00 from holding Atlas Copco AB or generate 53.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
THK Co Ltd vs. Atlas Copco AB
Performance |
| Timeline |
| THK Co |
| Atlas Copco AB |
THK Co and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THK Co and Atlas Copco
The main advantage of trading using opposite THK Co and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THK Co 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.| THK Co vs. Xinjiang Goldwind Science | THK Co vs. American Superconductor | THK Co vs. Cummins | THK Co vs. Aquagold International |
| Atlas Copco vs. Xinjiang Goldwind Science | Atlas Copco vs. American Superconductor | Atlas Copco vs. Cummins | Atlas Copco vs. Aquagold International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |