Correlation Between LIFE + and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both LIFE + and Telefonaktiebolaget 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 LIFE + and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE BANC SPLIT and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on LIFE + and Telefonaktiebolaget 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 LIFE + with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE + and Telefonaktiebolaget.
Diversification Opportunities for LIFE + and Telefonaktiebolaget
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFE and Telefonaktiebolaget is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and LIFE + 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 LIFE BANC SPLIT are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of LIFE + i.e., LIFE + and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between LIFE + and Telefonaktiebolaget
Assuming the 90 days horizon LIFE + is expected to generate 2.9 times less return on investment than Telefonaktiebolaget. But when comparing it to its historical volatility, LIFE BANC SPLIT is 1.14 times less risky than Telefonaktiebolaget. It trades about 0.04 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 224.00 in Telefonaktiebolaget LM Ericsson on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Telefonaktiebolaget LM Ericsson or generate 243.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
LIFE BANC SPLIT vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| LIFE BANC SPLIT |
| Telefonaktiebolaget |
LIFE + and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFE + and Telefonaktiebolaget
The main advantage of trading using opposite LIFE + and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE + position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| LIFE + vs. SEKISUI CHEMICAL | LIFE + vs. Chongqing Machinery Electric | LIFE + vs. TIANDE CHEMICAL | LIFE + vs. AGRICULTBK HADR25 YC |
| Telefonaktiebolaget vs. Gol Intelligent Airlines | Telefonaktiebolaget vs. Merit Medical Systems | Telefonaktiebolaget vs. American Airlines Group | Telefonaktiebolaget vs. MEDICAL FACILITIES NEW |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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