Correlation Between Telefonaktiebolaget and G2D Investments
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and G2D Investments 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 G2D Investments 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 G2D Investments, you can compare the effects of market volatilities on Telefonaktiebolaget and G2D Investments 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 G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and G2D Investments.
Diversification Opportunities for Telefonaktiebolaget and G2D Investments
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonaktiebolaget and G2D is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments 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 G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and G2D Investments go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and G2D Investments
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to under-perform the G2D Investments. But the stock apears to be less risky and, when comparing its historical volatility, Telefonaktiebolaget LM Ericsson is 1.17 times less risky than G2D Investments. The stock trades about -0.18 of its potential returns per unit of risk. The G2D Investments is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 217.00 in G2D Investments on August 30, 2024 and sell it today you would lose (2.00) from holding G2D Investments or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. G2D Investments
Performance |
| Timeline |
| Telefonaktiebolaget |
| G2D Investments |
Telefonaktiebolaget and G2D Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and G2D Investments
The main advantage of trading using opposite Telefonaktiebolaget and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.| Telefonaktiebolaget vs. United States Steel | Telefonaktiebolaget vs. Hospital Mater Dei | Telefonaktiebolaget vs. T Mobile | Telefonaktiebolaget vs. Zoom Video Communications |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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