Correlation Between Atacado SA and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Atacado 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 Atacado SA and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atacado SA and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Atacado 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 Atacado SA with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atacado SA and Telefonaktiebolaget.
Diversification Opportunities for Atacado SA and Telefonaktiebolaget
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Atacado and Telefonaktiebolaget is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Atacado SA and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and Atacado 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 Atacado 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 Atacado SA i.e., Atacado SA and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Atacado SA and Telefonaktiebolaget
Assuming the 90 days trading horizon Atacado SA is expected to generate 1.33 times more return on investment than Telefonaktiebolaget. However, Atacado SA is 1.33 times more volatile than Telefonaktiebolaget LM Ericsson. It trades about 0.33 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.14 per unit of risk. If you would invest 605.00 in Atacado SA on November 29, 2024 and sell it today you would earn a total of 121.00 from holding Atacado SA or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atacado SA vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Atacado SA |
| Telefonaktiebolaget |
Atacado SA and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atacado SA and Telefonaktiebolaget
The main advantage of trading using opposite Atacado SA and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atacado 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.| Atacado SA vs. Companhia Brasileira de | Atacado SA vs. Raia Drogasil SA | Atacado SA vs. Lojas Renner SA | Atacado SA vs. Minerva SA |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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