Correlation Between GE Aerospace and Atlas Copco

Can any of the company-specific risk be diversified away by investing in both GE Aerospace 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 GE Aerospace and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GE Aerospace and Atlas Copco AB, you can compare the effects of market volatilities on GE Aerospace 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 GE Aerospace with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Atlas Copco.

Diversification Opportunities for GE Aerospace and Atlas Copco

-0.05

Correlation Coefficient

GE Aerospace  Atlas Copco

Good diversification

The 3 months correlation between GE Aerospace and Atlas is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace 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 GE Aerospace 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 GE Aerospace 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 GE Aerospace i.e., GE Aerospace and Atlas Copco go up and down completely randomly.

Pair Corralation between GE Aerospace and Atlas Copco

If you would invest  17,464  in GE Aerospace on August 31, 2024 and sell it today you would earn a total of  596.00  from holding GE Aerospace or generate 3.41% return on investment over 90 days.

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

GE Aerospace  vs.  Atlas Copco AB

GE Aerospace

Risk-Adjusted Performance

7 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, GE Aerospace may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Atlas Copco AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with GE Aerospace and Atlas Copco

The main advantage of trading using opposite GE Aerospace and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace 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.

The idea behind GE Aerospace and Atlas Copco AB 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.