Correlation Between Atlas Copco and Ctek AB

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

Diversification Opportunities for Atlas Copco and Ctek AB

-0.36

Correlation Coefficient

Atlas Copco  Ctek AB

Very good diversification

The 3 months correlation between Atlas and Ctek is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Ctek AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ctek 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 Ctek AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ctek AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Ctek AB go up and down completely randomly.

Pair Corralation between Atlas Copco and Ctek AB

Assuming the 90 days trading horizon Atlas Copco AB is expected to under-perform the Ctek AB. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Copco AB is 1.82 times less risky than Ctek AB. The stock trades about -0.02 of its potential returns per unit of risk. The Ctek AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,390  in Ctek AB on December 30, 2024 and sell it today you would lose (10.00) from holding Ctek AB or give up 0.72% of portfolio value over 90 days.

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

Atlas Copco AB  vs.  Ctek AB

Atlas Copco AB

Risk-Adjusted Performance

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 somewhat strong fundamental indicators, Atlas Copco is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Ctek AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ctek AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ctek AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Atlas Copco and Ctek AB

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

The idea behind Atlas Copco AB and Ctek 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.