Correlation Between Telefonaktiebolaget and FIH Mobile
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and FIH Mobile 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 FIH Mobile 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 FIH Mobile Limited, you can compare the effects of market volatilities on Telefonaktiebolaget and FIH Mobile 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 FIH Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and FIH Mobile.
Diversification Opportunities for Telefonaktiebolaget and FIH Mobile
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telefonaktiebolaget and FIH is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and FIH Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIH Mobile Limited 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 FIH Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIH Mobile Limited has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and FIH Mobile go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and FIH Mobile
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.77 times more return on investment than FIH Mobile. However, Telefonaktiebolaget LM Ericsson is 1.3 times less risky than FIH Mobile. It trades about 0.22 of its potential returns per unit of risk. FIH Mobile Limited is currently generating about -0.05 per unit of risk. If you would invest 544.00 in Telefonaktiebolaget LM Ericsson on August 30, 2024 and sell it today you would earn a total of 234.00 from holding Telefonaktiebolaget LM Ericsson or generate 43.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. FIH Mobile Limited
Performance |
| Timeline |
| Telefonaktiebolaget |
| FIH Mobile Limited |
Telefonaktiebolaget and FIH Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and FIH Mobile
The main advantage of trading using opposite Telefonaktiebolaget and FIH Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, FIH Mobile 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 FIH Mobile will offset losses from the drop in FIH Mobile's long position.| Telefonaktiebolaget vs. Cisco Systems | Telefonaktiebolaget vs. Superior Plus Corp | Telefonaktiebolaget vs. SIVERS SEMICONDUCTORS AB | Telefonaktiebolaget vs. Talanx AG |
| FIH Mobile vs. WESTLAKE CHEMICAL | FIH Mobile vs. MARKET VECTR RETAIL | FIH Mobile vs. JIAHUA STORES | FIH Mobile vs. Westlake Chemical |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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