Correlation Between Telefonaktiebolaget and GP Investments
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and GP 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 GP 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 GP Investments, you can compare the effects of market volatilities on Telefonaktiebolaget and GP 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 GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and GP Investments.
Diversification Opportunities for Telefonaktiebolaget and GP Investments
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and GPIV33 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and GP Investments go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and GP Investments
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.54 times more return on investment than GP Investments. However, Telefonaktiebolaget LM Ericsson is 1.85 times less risky than GP Investments. It trades about 0.19 of its potential returns per unit of risk. GP Investments is currently generating about 0.01 per unit of risk. If you would invest 1,484 in Telefonaktiebolaget LM Ericsson on August 25, 2024 and sell it today you would earn a total of 832.00 from holding Telefonaktiebolaget LM Ericsson or generate 56.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. GP Investments
Performance |
| Timeline |
| Telefonaktiebolaget |
| GP Investments |
Telefonaktiebolaget and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and GP Investments
The main advantage of trading using opposite Telefonaktiebolaget and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, GP 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 GP Investments will offset losses from the drop in GP Investments' long position.| Telefonaktiebolaget vs. Spotify Technology SA | Telefonaktiebolaget vs. T Mobile | Telefonaktiebolaget vs. CM Hospitalar SA | Telefonaktiebolaget vs. Bemobi Mobile Tech |
| GP Investments vs. Fras le SA | GP Investments vs. Clave Indices De | GP Investments vs. BTG Pactual Logstica | GP Investments vs. Telefonaktiebolaget LM Ericsson |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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