Correlation Between Hillenbrand and Atlas Copco

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

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

Diversification Opportunities for Hillenbrand and Atlas Copco

0.56

Correlation Coefficient

Hillenbrand  Atlas Copco

Very weak diversification

The 3 months correlation between Hillenbrand and Atlas is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Atlas Copco ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco ADR and Hillenbrand 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 Hillenbrand 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 ADR has no effect on the direction of Hillenbrand i.e., Hillenbrand and Atlas Copco go up and down completely randomly.

Pair Corralation between Hillenbrand and Atlas Copco

Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the Atlas Copco. In addition to that, Hillenbrand is 1.61 times more volatile than Atlas Copco ADR. It trades about -0.02 of its total potential returns per unit of risk. Atlas Copco ADR is currently generating about 0.16 per unit of volatility. If you would invest  1,336  in Atlas Copco ADR on December 1, 2024 and sell it today you would earn a total of  142.00  from holding Atlas Copco ADR or generate 10.63% return on investment over 90 days.

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

Hillenbrand  vs.  Atlas Copco ADR

Hillenbrand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hillenbrand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Atlas Copco ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Atlas Copco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hillenbrand and Atlas Copco

The main advantage of trading using opposite Hillenbrand and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand 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 Hillenbrand and Atlas Copco ADR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.