Correlation Between Telefonaktiebolaget and EQ Oyj
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and EQ Oyj 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 EQ Oyj 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 eQ Oyj, you can compare the effects of market volatilities on Telefonaktiebolaget and EQ Oyj 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 EQ Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and EQ Oyj.
Diversification Opportunities for Telefonaktiebolaget and EQ Oyj
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and EQV1V is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and eQ Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eQ 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 EQ Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eQ Oyj has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and EQ Oyj go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and EQ Oyj
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 1.22 times more return on investment than EQ Oyj. However, Telefonaktiebolaget is 1.22 times more volatile than eQ Oyj. It trades about 0.05 of its potential returns per unit of risk. eQ Oyj is currently generating about -0.07 per unit of risk. If you would invest 526.00 in Telefonaktiebolaget LM Ericsson on August 31, 2024 and sell it today you would earn a total of 250.00 from holding Telefonaktiebolaget LM Ericsson or generate 47.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. eQ Oyj
Performance |
| Timeline |
| Telefonaktiebolaget |
| eQ Oyj |
Telefonaktiebolaget and EQ Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and EQ Oyj
The main advantage of trading using opposite Telefonaktiebolaget and EQ Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, EQ Oyj 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 EQ Oyj will offset losses from the drop in EQ Oyj's long position.| Telefonaktiebolaget vs. Telia Company AB | Telefonaktiebolaget vs. SSAB AB ser | Telefonaktiebolaget vs. Kesko Oyj | Telefonaktiebolaget vs. Stora Enso 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |