Correlation Between Atlas Copco and Spirax Sarco

Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Spirax Sarco 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 Spirax Sarco 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 Spirax Sarco Engineering PLC, you can compare the effects of market volatilities on Atlas Copco and Spirax Sarco 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 Spirax Sarco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Spirax Sarco.

Diversification Opportunities for Atlas Copco and Spirax Sarco

-0.27

Correlation Coefficient

Atlas Copco  Spirax Sarco

Very good diversification

The 3 months correlation between Atlas and Spirax is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax Sarco Enginee 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 Spirax Sarco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax Sarco Enginee has no effect on the direction of Atlas Copco i.e., Atlas Copco and Spirax Sarco go up and down completely randomly.

Pair Corralation between Atlas Copco and Spirax Sarco

Assuming the 90 days horizon Atlas Copco AB is expected to generate 1.26 times more return on investment than Spirax Sarco. However, Atlas Copco is 1.26 times more volatile than Spirax Sarco Engineering PLC. It trades about 0.05 of its potential returns per unit of risk. Spirax Sarco Engineering PLC is currently generating about 0.0 per unit of risk. If you would invest  1,552  in Atlas Copco AB on September 13, 2024 and sell it today you would earn a total of  104.00  from holding Atlas Copco AB or generate 6.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Atlas Copco AB  vs.  Spirax Sarco Engineering PLC

Atlas Copco AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Spirax Sarco Enginee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirax Sarco Engineering PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spirax Sarco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Atlas Copco and Spirax Sarco

The main advantage of trading using opposite Atlas Copco and Spirax Sarco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Spirax Sarco 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 Spirax Sarco will offset losses from the drop in Spirax Sarco's long position.

The idea behind Atlas Copco AB and Spirax Sarco Engineering PLC 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .