Correlation Between Atlas Copco and Raketech Group

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

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

Diversification Opportunities for Atlas Copco and Raketech Group

-0.85

Correlation Coefficient

Atlas Copco  Raketech Group

Pay attention - limited upside

The 3 months correlation between Atlas and Raketech is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco AB and Raketech Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raketech Group Holding and Atlas Copco 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 Atlas Copco AB are associated (or correlated) with Raketech Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raketech Group Holding has no effect on the direction of Atlas Copco i.e., Atlas Copco and Raketech Group go up and down completely randomly.

Pair Corralation between Atlas Copco and Raketech Group

Assuming the 90 days trading horizon Atlas Copco AB is expected to generate 0.51 times more return on investment than Raketech Group. However, Atlas Copco AB is 1.96 times less risky than Raketech Group. It trades about 0.1 of its potential returns per unit of risk. Raketech Group Holding is currently generating about -0.51 per unit of risk. If you would invest  20,130  in Atlas Copco AB on March 16, 2024 and sell it today you would earn a total of  450.00  from holding Atlas Copco AB or generate 2.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Atlas Copco AB  vs.  Raketech Group Holding

Atlas Copco AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atlas Copco sustained solid returns over the last few months and may actually be approaching a breakup point.

Raketech Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raketech Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Atlas Copco and Raketech Group

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

The idea behind Atlas Copco AB and Raketech Group Holding 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.