Correlation Between Troax Group and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Troax Group 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 Troax Group and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Troax Group AB and Atlas Copco AB, you can compare the effects of market volatilities on Troax Group 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 Troax Group with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Troax Group and Atlas Copco.
Diversification Opportunities for Troax Group and Atlas Copco
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Troax and Atlas is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Troax Group 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 Troax Group 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 Troax Group 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 Troax Group i.e., Troax Group and Atlas Copco go up and down completely randomly.
Pair Corralation between Troax Group and Atlas Copco
Assuming the 90 days trading horizon Troax Group AB is expected to under-perform the Atlas Copco. In addition to that, Troax Group is 1.39 times more volatile than Atlas Copco AB. It trades about -0.09 of its total potential returns per unit of risk. Atlas Copco AB is currently generating about 0.01 per unit of volatility. If you would invest 18,070 in Atlas Copco AB on December 4, 2024 and sell it today you would earn a total of 60.00 from holding Atlas Copco AB or generate 0.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Troax Group AB vs. Atlas Copco AB
Performance |
Timeline |
Troax Group AB |
Atlas Copco AB |
Troax Group and Atlas Copco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Troax Group and Atlas Copco
The main advantage of trading using opposite Troax Group and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Troax Group 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.Troax Group vs. Bufab Holding AB | Troax Group vs. Thule Group AB | Troax Group vs. Beijer Ref AB | Troax Group vs. Lifco AB |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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