Correlation Between Telefonaktiebolaget and Aallon Group
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Aallon Group 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 Aallon Group 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 Aallon Group Oyj, you can compare the effects of market volatilities on Telefonaktiebolaget and Aallon Group 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 Aallon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Aallon Group.
Diversification Opportunities for Telefonaktiebolaget and Aallon Group
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telefonaktiebolaget and Aallon is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Aallon Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aallon Group Oyj 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 Aallon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aallon Group Oyj has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Aallon Group go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Aallon Group
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to under-perform the Aallon Group. But the stock apears to be less risky and, when comparing its historical volatility, Telefonaktiebolaget LM Ericsson is 1.48 times less risky than Aallon Group. The stock trades about -0.07 of its potential returns per unit of risk. The Aallon Group Oyj is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 826.00 in Aallon Group Oyj on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Aallon Group Oyj or generate 0.24% 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. Aallon Group Oyj
Performance |
| Timeline |
| Telefonaktiebolaget |
| Aallon Group Oyj |
Telefonaktiebolaget and Aallon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Aallon Group
The main advantage of trading using opposite Telefonaktiebolaget and Aallon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Aallon Group 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 Aallon Group will offset losses from the drop in Aallon Group's long position.| Telefonaktiebolaget vs. Telia Company AB | Telefonaktiebolaget vs. SSAB AB ser | Telefonaktiebolaget vs. Stora Enso Oyj | Telefonaktiebolaget vs. Orion Oyj B |
| Aallon Group vs. Fondia Oyj | Aallon Group vs. Talenom Oyj | Aallon Group vs. Admicom Oyj | Aallon Group vs. Vincit Group Oyj |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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