Correlation Between Ballard Power and Atlas Copco

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

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

Diversification Opportunities for Ballard Power and Atlas Copco

-0.54

Correlation Coefficient

Ballard Power  Atlas Copco

Excellent diversification

The 3 months correlation between Ballard and Atlas is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Atlas Copco A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco A and Ballard Power 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 Ballard Power Systems 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 A has no effect on the direction of Ballard Power i.e., Ballard Power and Atlas Copco go up and down completely randomly.

Pair Corralation between Ballard Power and Atlas Copco

Assuming the 90 days horizon Ballard Power Systems is expected to under-perform the Atlas Copco. In addition to that, Ballard Power is 1.66 times more volatile than Atlas Copco A. It trades about -0.1 of its total potential returns per unit of risk. Atlas Copco A is currently generating about 0.05 per unit of volatility. If you would invest  1,440  in Atlas Copco A on December 29, 2024 and sell it today you would earn a total of  80.00  from holding Atlas Copco A or generate 5.56% return on investment over 90 days.

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

Ballard Power Systems  vs.  Atlas Copco A

Ballard Power Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballard Power Systems 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atlas Copco A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ballard Power and Atlas Copco

The main advantage of trading using opposite Ballard Power and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power 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 Ballard Power Systems and Atlas Copco A 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.