Correlation Between Telefonaktiebolaget and Energisa
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Energisa 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 Energisa 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 Energisa SA, you can compare the effects of market volatilities on Telefonaktiebolaget and Energisa 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 Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Energisa.
Diversification Opportunities for Telefonaktiebolaget and Energisa
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and Energisa is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA 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 Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Energisa go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Energisa
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.83 times more return on investment than Energisa. However, Telefonaktiebolaget LM Ericsson is 1.21 times less risky than Energisa. It trades about 0.08 of its potential returns per unit of risk. Energisa SA is currently generating about -0.12 per unit of risk. If you would invest 2,440 in Telefonaktiebolaget LM Ericsson on October 26, 2024 and sell it today you would earn a total of 160.00 from holding Telefonaktiebolaget LM Ericsson or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Energisa SA
Performance |
| Timeline |
| Telefonaktiebolaget |
| Energisa SA |
Telefonaktiebolaget and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Energisa
The main advantage of trading using opposite Telefonaktiebolaget and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Telefonaktiebolaget vs. SK Telecom Co, | Telefonaktiebolaget vs. Check Point Software | Telefonaktiebolaget vs. G2D Investments | Telefonaktiebolaget vs. Agilent Technologies |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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