Correlation Between Oracle and Atlas Copco

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

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

Diversification Opportunities for Oracle and Atlas Copco

-0.11

Correlation Coefficient

Oracle  Atlas Copco

Good diversification

The 3 months correlation between Oracle and Atlas is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Oracle 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 Oracle 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 Oracle 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 Oracle i.e., Oracle and Atlas Copco go up and down completely randomly.

Pair Corralation between Oracle and Atlas Copco

Given the investment horizon of 90 days Oracle is expected to under-perform the Atlas Copco. In addition to that, Oracle is 1.65 times more volatile than Atlas Copco ADR. It trades about -0.07 of its total potential returns per unit of risk. Atlas Copco ADR is currently generating about 0.08 per unit of volatility. If you would invest  1,357  in Atlas Copco ADR on December 28, 2024 and sell it today you would earn a total of  113.00  from holding Atlas Copco ADR or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Oracle  vs.  Atlas Copco ADR

Oracle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oracle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Atlas Copco ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Oracle and Atlas Copco

The main advantage of trading using opposite Oracle and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle 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 Oracle 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.