Correlation Between Aumann AG and Atlas Copco

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

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

Diversification Opportunities for Aumann AG and Atlas Copco

0.68

Correlation Coefficient

Aumann AG  Atlas Copco

Poor diversification

The 3 months correlation between Aumann and Atlas is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aumann AG 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 Aumann AG 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 Aumann AG 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 Aumann AG i.e., Aumann AG and Atlas Copco go up and down completely randomly.

Pair Corralation between Aumann AG and Atlas Copco

Assuming the 90 days horizon Aumann AG is expected to under-perform the Atlas Copco. In addition to that, Aumann AG is 1.84 times more volatile than Atlas Copco AB. It trades about -0.08 of its total potential returns per unit of risk. Atlas Copco AB is currently generating about -0.02 per unit of volatility. If you would invest  1,576  in Atlas Copco AB on November 29, 2024 and sell it today you would lose (31.00) from holding Atlas Copco AB or give up 1.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Aumann AG  vs.  Atlas Copco AB

Aumann AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aumann AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atlas Copco AB

Risk-Adjusted Performance

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 nearly stable technical and fundamental indicators, Atlas Copco is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aumann AG and Atlas Copco

The main advantage of trading using opposite Aumann AG and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aumann AG 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 Aumann AG 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.