Correlation Between Atlas Copco and American Pwr

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

Diversification Opportunities for Atlas Copco and American Pwr

-0.11

Correlation Coefficient

Atlas Copco  American Pwr

Good diversification

The 3 months correlation between Atlas and American is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and American Pwr Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Pwr Group 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 American Pwr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Pwr Group has no effect on the direction of Atlas Copco i.e., Atlas Copco and American Pwr go up and down completely randomly.

Pair Corralation between Atlas Copco and American Pwr

Assuming the 90 days horizon Atlas Copco AB is expected to generate 0.0 times more return on investment than American Pwr. However, Atlas Copco AB is 226.86 times less risky than American Pwr. It trades about -0.21 of its potential returns per unit of risk. American Pwr Group is currently generating about -0.07 per unit of risk. If you would invest  1,545  in Atlas Copco AB on December 29, 2024 and sell it today you would lose (4.00) from holding Atlas Copco AB or give up 0.26% 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.  American Pwr Group

Atlas Copco AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Pwr Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Pwr Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, American Pwr demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Copco and American Pwr

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

The idea behind Atlas Copco AB and American Pwr Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.