Correlation Between OptiCept Technologies and Atlas Copco

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

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

Diversification Opportunities for OptiCept Technologies and Atlas Copco

0.74

Correlation Coefficient

OptiCept Technologies  Atlas Copco

Poor diversification

The 3 months correlation between OptiCept and Atlas is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding OptiCept Technologies AB 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 OptiCept Technologies 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 OptiCept Technologies AB 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 OptiCept Technologies i.e., OptiCept Technologies and Atlas Copco go up and down completely randomly.

Pair Corralation between OptiCept Technologies and Atlas Copco

Assuming the 90 days trading horizon OptiCept Technologies is expected to generate 2.75 times less return on investment than Atlas Copco. In addition to that, OptiCept Technologies is 3.96 times more volatile than Atlas Copco AB. It trades about 0.0 of its total potential returns per unit of risk. Atlas Copco AB is currently generating about 0.04 per unit of volatility. If you would invest  11,189  in Atlas Copco AB on September 26, 2024 and sell it today you would earn a total of  3,726  from holding Atlas Copco AB or generate 33.3% return on investment over 90 days.

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

OptiCept Technologies AB  vs.  Atlas Copco AB

OptiCept Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OptiCept Technologies 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.

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.

Pair Trading with OptiCept Technologies and Atlas Copco

The main advantage of trading using opposite OptiCept Technologies and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OptiCept Technologies 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 OptiCept Technologies AB 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.