Correlation Between Telefonaktiebolaget and 4C Group
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and 4C 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 4C 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 4C Group AB, you can compare the effects of market volatilities on Telefonaktiebolaget and 4C 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 4C Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and 4C Group.
Diversification Opportunities for Telefonaktiebolaget and 4C Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and 4C Group is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and 4C Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4C Group AB 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 4C Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4C Group AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and 4C Group go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and 4C Group
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.28 times more return on investment than 4C Group. However, Telefonaktiebolaget LM Ericsson is 3.57 times less risky than 4C Group. It trades about 0.0 of its potential returns per unit of risk. 4C Group AB is currently generating about -0.34 per unit of risk. If you would invest 8,890 in Telefonaktiebolaget LM Ericsson on September 24, 2024 and sell it today you would lose (10.00) from holding Telefonaktiebolaget LM Ericsson or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. 4C Group AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| 4C Group AB |
Telefonaktiebolaget and 4C Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and 4C Group
The main advantage of trading using opposite Telefonaktiebolaget and 4C Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, 4C 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 4C Group will offset losses from the drop in 4C Group's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| 4C Group vs. B3 Consulting Group | 4C Group vs. Sleep Cycle AB | 4C Group vs. Avensia publ AB | 4C Group vs. CAG Group AB |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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