Correlation Between Telefonaktiebolaget and BROADPEAK
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and BROADPEAK 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 BROADPEAK 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 BROADPEAK SA EO, you can compare the effects of market volatilities on Telefonaktiebolaget and BROADPEAK 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 BROADPEAK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and BROADPEAK.
Diversification Opportunities for Telefonaktiebolaget and BROADPEAK
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telefonaktiebolaget and BROADPEAK is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and BROADPEAK SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADPEAK SA EO 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 BROADPEAK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADPEAK SA EO has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and BROADPEAK go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and BROADPEAK
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to under-perform the BROADPEAK. In addition to that, Telefonaktiebolaget is 3.16 times more volatile than BROADPEAK SA EO. It trades about -0.12 of its total potential returns per unit of risk. BROADPEAK SA EO is currently generating about -0.05 per unit of volatility. If you would invest 93.00 in BROADPEAK SA EO on October 30, 2024 and sell it today you would lose (1.00) from holding BROADPEAK SA EO or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. BROADPEAK SA EO
Performance |
| Timeline |
| Telefonaktiebolaget |
| BROADPEAK SA EO |
Telefonaktiebolaget and BROADPEAK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and BROADPEAK
The main advantage of trading using opposite Telefonaktiebolaget and BROADPEAK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, BROADPEAK 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 BROADPEAK will offset losses from the drop in BROADPEAK's long position.| Telefonaktiebolaget vs. Motorola Solutions | Telefonaktiebolaget vs. Nokia | Telefonaktiebolaget vs. Nokia |
| BROADPEAK vs. CHIBA BANK | BROADPEAK vs. Virtu Financial | BROADPEAK vs. Fevertree Drinks PLC | BROADPEAK vs. Synchrony Financial |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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