Correlation Between CapMan Oyj and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both CapMan Oyj 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 CapMan Oyj and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapMan Oyj B and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on CapMan Oyj 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 CapMan Oyj with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapMan Oyj and Telefonaktiebolaget.
Diversification Opportunities for CapMan Oyj and Telefonaktiebolaget
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CapMan and Telefonaktiebolaget is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and CapMan Oyj 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 CapMan Oyj B 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 CapMan Oyj i.e., CapMan Oyj and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between CapMan Oyj and Telefonaktiebolaget
Assuming the 90 days trading horizon CapMan Oyj is expected to generate 8.19 times less return on investment than Telefonaktiebolaget. But when comparing it to its historical volatility, CapMan Oyj B is 1.13 times less risky than Telefonaktiebolaget. It trades about 0.03 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 648.00 in Telefonaktiebolaget LM Ericsson on September 12, 2024 and sell it today you would earn a total of 138.00 from holding Telefonaktiebolaget LM Ericsson or generate 21.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapMan Oyj B vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| CapMan Oyj B |
| Telefonaktiebolaget |
CapMan Oyj and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapMan Oyj and Telefonaktiebolaget
The main advantage of trading using opposite CapMan Oyj and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapMan Oyj 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.| CapMan Oyj vs. United Bankers Oyj | CapMan Oyj vs. HKFoods Oyj A | CapMan Oyj vs. Alandsbanken Abp A | CapMan Oyj vs. QPR Software Oyj |
| Telefonaktiebolaget vs. Telia Company AB | Telefonaktiebolaget vs. SSAB AB ser | Telefonaktiebolaget vs. Kesko Oyj | Telefonaktiebolaget vs. Stora Enso Oyj |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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