Correlation Between Atlas Copco and Industrivarden
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Industrivarden 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 Industrivarden 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 Industrivarden AB ser, you can compare the effects of market volatilities on Atlas Copco and Industrivarden 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 Industrivarden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Industrivarden.
Diversification Opportunities for Atlas Copco and Industrivarden
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlas and Industrivarden is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser 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 Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Atlas Copco i.e., Atlas Copco and Industrivarden go up and down completely randomly.
Pair Corralation between Atlas Copco and Industrivarden
Assuming the 90 days trading horizon Atlas Copco is expected to generate 1.0 times less return on investment than Industrivarden. In addition to that, Atlas Copco is 1.47 times more volatile than Industrivarden AB ser. It trades about 0.04 of its total potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.07 per unit of volatility. If you would invest 25,167 in Industrivarden AB ser on September 26, 2024 and sell it today you would earn a total of 9,513 from holding Industrivarden AB ser or generate 37.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Atlas Copco AB vs. Industrivarden AB ser
Performance |
Timeline |
Atlas Copco AB |
Industrivarden AB ser |
Atlas Copco and Industrivarden Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Atlas Copco and Industrivarden
The main advantage of trading using opposite Atlas Copco and Industrivarden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Industrivarden 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 Industrivarden will offset losses from the drop in Industrivarden's long position.Atlas Copco vs. Troax Group AB | Atlas Copco vs. Metacon AB | Atlas Copco vs. OptiCept Technologies AB | Atlas Copco vs. BoMill AB |
Industrivarden vs. Kinnevik Investment AB | Industrivarden vs. Samhllsbyggnadsbolaget i Norden | Industrivarden vs. Swedbank AB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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