Correlation Between Atlas Copco and Waystream Holding

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

Diversification Opportunities for Atlas Copco and Waystream Holding

0.47

Correlation Coefficient

Atlas Copco  Waystream Holding

Very weak diversification

The 3 months correlation between Atlas and Waystream is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Waystream Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waystream Holding 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 Waystream Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waystream Holding has no effect on the direction of Atlas Copco i.e., Atlas Copco and Waystream Holding go up and down completely randomly.

Pair Corralation between Atlas Copco and Waystream Holding

Assuming the 90 days trading horizon Atlas Copco AB is expected to under-perform the Waystream Holding. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Copco AB is 3.42 times less risky than Waystream Holding. The stock trades about -0.18 of its potential returns per unit of risk. The Waystream Holding AB is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,910  in Waystream Holding AB on September 28, 2024 and sell it today you would lose (324.00) from holding Waystream Holding AB or give up 16.96% of portfolio value over 90 days.

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

Atlas Copco AB  vs.  Waystream Holding 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 uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Waystream Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waystream Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Atlas Copco and Waystream Holding

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

The idea behind Atlas Copco AB and Waystream Holding 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.