Correlation Between Telefonaktiebolaget and Raute Oyj
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Raute 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 Raute 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 Raute Oyj, you can compare the effects of market volatilities on Telefonaktiebolaget and Raute 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 Raute Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Raute Oyj.
Diversification Opportunities for Telefonaktiebolaget and Raute Oyj
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telefonaktiebolaget and Raute is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Raute Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raute 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 Raute Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raute Oyj has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Raute Oyj go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Raute Oyj
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to under-perform the Raute Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Telefonaktiebolaget LM Ericsson is 1.59 times less risky than Raute Oyj. The stock trades about -0.03 of its potential returns per unit of risk. The Raute Oyj is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,300 in Raute Oyj on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Raute Oyj or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Raute Oyj
Performance |
| Timeline |
| Telefonaktiebolaget |
| Raute Oyj |
Telefonaktiebolaget and Raute Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Raute Oyj
The main advantage of trading using opposite Telefonaktiebolaget and Raute Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Raute 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 Raute Oyj will offset losses from the drop in Raute Oyj's long position.| Telefonaktiebolaget vs. Telia Company AB | Telefonaktiebolaget vs. SSAB AB ser | Telefonaktiebolaget vs. Kesko Oyj | Telefonaktiebolaget vs. Stora Enso Oyj |
| Raute Oyj vs. Ponsse Oyj 1 | Raute Oyj vs. Lassila Tikanoja Oyj | Raute Oyj vs. Tokmanni Group Oyj | Raute Oyj vs. CapMan Oyj B |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |