Correlation Between Axfood AB and Telia Company
Can any of the company-specific risk be diversified away by investing in both Axfood AB 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 Axfood AB and Telia Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Telia Company AB, you can compare the effects of market volatilities on Axfood AB 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 Axfood AB with a short position of Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Telia Company.
Diversification Opportunities for Axfood AB and Telia Company
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axfood and Telia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Axfood 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 Axfood AB 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 Axfood 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 Axfood AB i.e., Axfood AB and Telia Company go up and down completely randomly.
Pair Corralation between Axfood AB and Telia Company
Assuming the 90 days trading horizon Axfood AB is expected to under-perform the Telia Company. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 1.01 times less risky than Telia Company. The stock trades about -0.07 of its potential returns per unit of risk. The Telia Company AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,144 in Telia Company AB on August 25, 2024 and sell it today you would earn a total of 24.00 from holding Telia Company AB or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Telia Company AB
Performance |
| Timeline |
| Axfood AB |
| Telia Company |
Axfood AB and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Telia Company
The main advantage of trading using opposite Axfood AB and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB 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.| Axfood AB vs. Castellum AB | Axfood AB vs. Tele2 AB | Axfood AB vs. Investor AB ser | Axfood AB vs. Kinnevik Investment AB |
| Telia Company vs. Alfa Laval AB | Telia Company vs. Anoto Group AB | Telia Company vs. Active Biotech AB | Telia Company vs. BioInvent International AB |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |