Correlation Between Atlas Copco and Dürr Aktiengesellscha

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

By analyzing existing cross correlation between Atlas Copco A and Drr Aktiengesellschaft, you can compare the effects of market volatilities on Atlas Copco and Dürr Aktiengesellscha 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 Dürr Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Dürr Aktiengesellscha.

Diversification Opportunities for Atlas Copco and Dürr Aktiengesellscha

0.08

Correlation Coefficient

Atlas Copco  Dürr Aktiengesellscha

Significant diversification

The 3 months correlation between Atlas and Dürr is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco A and Drr Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drr Aktiengesellschaft 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 A are associated (or correlated) with Dürr Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drr Aktiengesellschaft has no effect on the direction of Atlas Copco i.e., Atlas Copco and Dürr Aktiengesellscha go up and down completely randomly.

Pair Corralation between Atlas Copco and Dürr Aktiengesellscha

Assuming the 90 days horizon Atlas Copco is expected to generate 14.24 times less return on investment than Dürr Aktiengesellscha. But when comparing it to its historical volatility, Atlas Copco A is 1.16 times less risky than Dürr Aktiengesellscha. It trades about 0.01 of its potential returns per unit of risk. Drr Aktiengesellschaft is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,957  in Drr Aktiengesellschaft on September 16, 2024 and sell it today you would earn a total of  309.00  from holding Drr Aktiengesellschaft or generate 15.79% return on investment over 90 days.

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

Atlas Copco A  vs.  Drr Aktiengesellschaft

Atlas Copco A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Copco A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Atlas Copco is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Drr Aktiengesellschaft

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Drr Aktiengesellschaft are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Dürr Aktiengesellscha unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Copco and Dürr Aktiengesellscha

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

The idea behind Atlas Copco A and Drr Aktiengesellschaft 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.