Correlation Between Atlas Copco and Atlas Copco

Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Atlas Copco 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 Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atlas Copco ADR and Atlas Copco AB, you can compare the effects of market volatilities on Atlas Copco and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Atlas Copco.

Diversification Opportunities for Atlas Copco and Atlas Copco

0.17

Correlation Coefficient

Atlas Copco  Atlas Copco

Average diversification

The 3 months correlation between Atlas and Atlas is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco ADR and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco 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 ADR are associated (or correlated) with Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Atlas Copco i.e., Atlas Copco and Atlas Copco go up and down completely randomly.

Pair Corralation between Atlas Copco and Atlas Copco

Assuming the 90 days horizon Atlas Copco is expected to generate 1.18 times less return on investment than Atlas Copco. But when comparing it to its historical volatility, Atlas Copco ADR is 1.5 times less risky than Atlas Copco. It trades about 0.06 of its potential returns per unit of risk. Atlas Copco AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,273  in Atlas Copco AB on November 20, 2024 and sell it today you would earn a total of  470.00  from holding Atlas Copco AB or generate 36.92% return on investment over 90 days.

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

Atlas Copco ADR  vs.  Atlas Copco AB

Atlas Copco ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Atlas Copco showed solid returns over the last few months and may actually be approaching a breakup point.

Atlas Copco AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atlas Copco reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Copco and Atlas Copco

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

The idea behind Atlas Copco ADR and Atlas Copco 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .