Correlation Between Bredband2 and Teqnion AB
Can any of the company-specific risk be diversified away by investing in both Bredband2 and Teqnion AB 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 Bredband2 and Teqnion AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bredband2 i Skandinavien and Teqnion AB, you can compare the effects of market volatilities on Bredband2 and Teqnion AB 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 Bredband2 with a short position of Teqnion AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bredband2 and Teqnion AB.
Diversification Opportunities for Bredband2 and Teqnion AB
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bredband2 and Teqnion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bredband2 i Skandinavien and Teqnion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teqnion AB and Bredband2 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 Bredband2 i Skandinavien are associated (or correlated) with Teqnion AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teqnion AB has no effect on the direction of Bredband2 i.e., Bredband2 and Teqnion AB go up and down completely randomly.
Pair Corralation between Bredband2 and Teqnion AB
Assuming the 90 days trading horizon Bredband2 i Skandinavien is expected to generate 1.14 times more return on investment than Teqnion AB. However, Bredband2 is 1.14 times more volatile than Teqnion AB. It trades about 0.02 of its potential returns per unit of risk. Teqnion AB is currently generating about -0.57 per unit of risk. If you would invest 196.00 in Bredband2 i Skandinavien on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Bredband2 i Skandinavien or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bredband2 i Skandinavien vs. Teqnion AB
Performance |
| Timeline |
| Bredband2 i Skandinavien |
| Teqnion AB |
Bredband2 and Teqnion AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bredband2 and Teqnion AB
The main advantage of trading using opposite Bredband2 and Teqnion AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bredband2 position performs unexpectedly, Teqnion AB 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 Teqnion AB will offset losses from the drop in Teqnion AB's long position.The idea behind Bredband2 i Skandinavien and Teqnion AB 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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