Correlation Between Atlas Copco and Investor

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Investor 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 Atlas Copco and Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Copco AB and Investor AB ser, you can compare the effects of market volatilities on Atlas Copco and Investor 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 Atlas Copco with a short position of Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Investor.

Diversification Opportunities for Atlas Copco and Investor

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Atlas and Investor is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Investor AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB ser and Atlas Copco 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 Atlas Copco AB are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB ser has no effect on the direction of Atlas Copco i.e., Atlas Copco and Investor go up and down completely randomly.

Pair Corralation between Atlas Copco and Investor

Assuming the 90 days trading horizon Atlas Copco AB is expected to generate 1.64 times more return on investment than Investor. However, Atlas Copco is 1.64 times more volatile than Investor AB ser. It trades about 0.02 of its potential returns per unit of risk. Investor AB ser is currently generating about -0.01 per unit of risk. If you would invest  15,760  in Atlas Copco AB on September 13, 2024 and sell it today you would earn a total of  135.00  from holding Atlas Copco AB or generate 0.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.46%
ValuesDaily Returns

Atlas Copco AB  vs.  Investor AB ser

 Performance 
       Timeline  
Atlas Copco AB 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Atlas Copco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Investor AB ser 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Investor AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Atlas Copco and Investor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atlas Copco and Investor

The main advantage of trading using opposite Atlas Copco and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor's long position.
The idea behind Atlas Copco AB and Investor AB ser pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 CEOs Directory module to screen CEOs from public companies around the world.

Other Complementary Tools

Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges