Correlation Between Telefonaktiebolaget and ATMA Participaes
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and ATMA Participaes 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 Telefonaktiebolaget and ATMA Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonaktiebolaget LM Ericsson and ATMA Participaes SA, you can compare the effects of market volatilities on Telefonaktiebolaget and ATMA Participaes 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 Telefonaktiebolaget with a short position of ATMA Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and ATMA Participaes.
Diversification Opportunities for Telefonaktiebolaget and ATMA Participaes
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonaktiebolaget and ATMA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson are associated (or correlated) with ATMA Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMA Participaes has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and ATMA Participaes go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and ATMA Participaes
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.74 times more return on investment than ATMA Participaes. However, Telefonaktiebolaget LM Ericsson is 1.35 times less risky than ATMA Participaes. It trades about -0.16 of its potential returns per unit of risk. ATMA Participaes SA is currently generating about -0.13 per unit of risk. If you would invest 2,440 in Telefonaktiebolaget LM Ericsson on August 27, 2024 and sell it today you would lose (124.00) from holding Telefonaktiebolaget LM Ericsson or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. ATMA Participaes SA
Performance |
| Timeline |
| Telefonaktiebolaget |
| ATMA Participaes |
Telefonaktiebolaget and ATMA Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and ATMA Participaes
The main advantage of trading using opposite Telefonaktiebolaget and ATMA Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, ATMA Participaes 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 ATMA Participaes will offset losses from the drop in ATMA Participaes' long position.| Telefonaktiebolaget vs. Verizon Communications | Telefonaktiebolaget vs. Lloyds Banking Group | Telefonaktiebolaget vs. Costco Wholesale | Telefonaktiebolaget vs. HDFC Bank Limited |
| ATMA Participaes vs. Mliuz SA | ATMA Participaes vs. Lojas Quero Quero SA | ATMA Participaes vs. Grupo SBF SA | ATMA Participaes vs. Enjoei SA |
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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