Correlation Between Active Biotech and Telia Company
Can any of the company-specific risk be diversified away by investing in both Active Biotech and Telia Company 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 Active Biotech and Telia Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Active Biotech AB and Telia Company AB, you can compare the effects of market volatilities on Active Biotech and Telia Company 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 Active Biotech with a short position of Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Biotech and Telia Company.
Diversification Opportunities for Active Biotech and Telia Company
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Active and Telia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Active Biotech AB and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company and Active Biotech 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 Active Biotech AB are associated (or correlated) with Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Active Biotech i.e., Active Biotech and Telia Company go up and down completely randomly.
Pair Corralation between Active Biotech and Telia Company
Assuming the 90 days trading horizon Active Biotech AB is expected to generate 22.4 times more return on investment than Telia Company. However, Active Biotech is 22.4 times more volatile than Telia Company AB. It trades about 0.05 of its potential returns per unit of risk. Telia Company AB is currently generating about 0.04 per unit of risk. If you would invest 45.00 in Active Biotech AB on August 29, 2024 and sell it today you would lose (19.00) from holding Active Biotech AB or give up 42.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Active Biotech AB vs. Telia Company AB
Performance |
| Timeline |
| Active Biotech AB |
| Telia Company |
Active Biotech and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Biotech and Telia Company
The main advantage of trading using opposite Active Biotech and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Biotech position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company's long position.| Active Biotech vs. BioInvent International AB | Active Biotech vs. Orexo AB | Active Biotech vs. Alligator Bioscience AB | Active Biotech vs. Swedish Orphan Biovitrum |
| Telia Company vs. Tele2 AB | Telia Company vs. Swedbank AB | Telia Company vs. Svenska Handelsbanken AB | Telia Company vs. Nordea Bank Abp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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