Correlation Between SCOTT TECHNOLOGY and Atrium Ljungberg

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and Atrium Ljungberg

0.8

Correlation Coefficient

SCOTT TECHNOLOGY  Atrium Ljungberg

Very poor diversification

The 3 months correlation between SCOTT and Atrium is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Atrium Ljungberg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Ljungberg and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY are associated (or correlated) with Atrium Ljungberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Ljungberg has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Atrium Ljungberg go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Atrium Ljungberg

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Atrium Ljungberg. In addition to that, SCOTT TECHNOLOGY is 1.12 times more volatile than Atrium Ljungberg AB. It trades about -0.18 of its total potential returns per unit of risk. Atrium Ljungberg AB is currently generating about -0.09 per unit of volatility. If you would invest  1,678  in Atrium Ljungberg AB on December 21, 2024 and sell it today you would lose (170.00) from holding Atrium Ljungberg AB or give up 10.13% of portfolio value over 90 days.

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

SCOTT TECHNOLOGY  vs.  Atrium Ljungberg AB

SCOTT TECHNOLOGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCOTT TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Atrium Ljungberg

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atrium Ljungberg AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SCOTT TECHNOLOGY and Atrium Ljungberg

The main advantage of trading using opposite SCOTT TECHNOLOGY and Atrium Ljungberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, Atrium Ljungberg 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 Atrium Ljungberg will offset losses from the drop in Atrium Ljungberg's long position.

The idea behind SCOTT TECHNOLOGY and Atrium Ljungberg 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .