Correlation Between Atlas Copco and Beijer Alma

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

Diversification Opportunities for Atlas Copco and Beijer Alma

0.42

Correlation Coefficient

Atlas Copco  Beijer Alma

Very weak diversification

The 3 months correlation between Atlas and Beijer is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Beijer Alma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Alma AB 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 Beijer Alma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Alma AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Beijer Alma go up and down completely randomly.

Pair Corralation between Atlas Copco and Beijer Alma

Assuming the 90 days trading horizon Atlas Copco AB is expected to generate 0.78 times more return on investment than Beijer Alma. However, Atlas Copco AB is 1.28 times less risky than Beijer Alma. It trades about 0.1 of its potential returns per unit of risk. Beijer Alma AB is currently generating about -0.01 per unit of risk. If you would invest  15,875  in Atlas Copco AB on October 25, 2024 and sell it today you would earn a total of  1,115  from holding Atlas Copco AB or generate 7.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Atlas Copco AB  vs.  Beijer Alma AB

Atlas Copco AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Beijer Alma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijer Alma AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Beijer Alma 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 Beijer Alma

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

The idea behind Atlas Copco AB and Beijer Alma 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.