Correlation Between B3 SA and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both B3 SA 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 B3 SA and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B3 SA and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on B3 SA 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 B3 SA with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of B3 SA and Telefonaktiebolaget.
Diversification Opportunities for B3 SA and Telefonaktiebolaget
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between B3SA3 and Telefonaktiebolaget is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding B3 SA and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and B3 SA 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 B3 SA 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 B3 SA i.e., B3 SA and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between B3 SA and Telefonaktiebolaget
Assuming the 90 days trading horizon B3 SA is expected to under-perform the Telefonaktiebolaget. But the stock apears to be less risky and, when comparing its historical volatility, B3 SA is 1.3 times less risky than Telefonaktiebolaget. The stock trades about -0.02 of its potential returns per unit of risk. The Telefonaktiebolaget LM Ericsson is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,522 in Telefonaktiebolaget LM Ericsson on August 31, 2024 and sell it today you would earn a total of 878.00 from holding Telefonaktiebolaget LM Ericsson or generate 57.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 88.42% |
| Values | Daily Returns |
B3 SA vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| B3 SA |
| Telefonaktiebolaget |
B3 SA and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B3 SA and Telefonaktiebolaget
The main advantage of trading using opposite B3 SA and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B3 SA 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.The idea behind B3 SA and Telefonaktiebolaget LM Ericsson 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.| Telefonaktiebolaget vs. Ameriprise Financial | Telefonaktiebolaget vs. HDFC Bank Limited | Telefonaktiebolaget vs. Prudential Financial | Telefonaktiebolaget vs. Costco Wholesale |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Correlations Find global opportunities by holding instruments from different markets |