Correlation Between Atlas Copco and Nyfosa AB

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

Diversification Opportunities for Atlas Copco and Nyfosa AB

0.9

Correlation Coefficient

Atlas Copco  Nyfosa AB

Almost no diversification

The 3 months correlation between Atlas and Nyfosa is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Nyfosa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyfosa 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 Nyfosa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyfosa AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Nyfosa AB go up and down completely randomly.

Pair Corralation between Atlas Copco and Nyfosa AB

Assuming the 90 days trading horizon Atlas Copco AB is expected to under-perform the Nyfosa AB. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Copco AB is 1.3 times less risky than Nyfosa AB. The stock trades about -0.06 of its potential returns per unit of risk. The Nyfosa AB is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  11,370  in Nyfosa AB on August 31, 2024 and sell it today you would lose (540.00) from holding Nyfosa AB or give up 4.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Atlas Copco AB  vs.  Nyfosa AB

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 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.

Nyfosa AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nyfosa AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Nyfosa 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 Nyfosa AB

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

The idea behind Atlas Copco AB and Nyfosa 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.