Correlation Between Atlas Copco and Kollect On

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

Diversification Opportunities for Atlas Copco and Kollect On

-0.67

Correlation Coefficient

Atlas Copco  Kollect On

Excellent diversification

The 3 months correlation between Atlas and Kollect is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Kollect on Demand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kollect on Demand 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 Kollect On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kollect on Demand has no effect on the direction of Atlas Copco i.e., Atlas Copco and Kollect On go up and down completely randomly.

Pair Corralation between Atlas Copco and Kollect On

Assuming the 90 days trading horizon Atlas Copco AB is expected to under-perform the Kollect On. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Copco AB is 1.93 times less risky than Kollect On. The stock trades about -0.08 of its potential returns per unit of risk. The Kollect on Demand is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  252.00  in Kollect on Demand on September 24, 2024 and sell it today you would earn a total of  14.00  from holding Kollect on Demand or generate 5.56% return on investment over 90 days.

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

Atlas Copco AB  vs.  Kollect on Demand

Atlas Copco AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Copco AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Kollect on Demand

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kollect on Demand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kollect On unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Copco and Kollect On

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

The idea behind Atlas Copco AB and Kollect on Demand 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.