Correlation Between Telefonaktiebolaget and Acroud AB
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Acroud AB 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 Acroud AB 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 Acroud AB, you can compare the effects of market volatilities on Telefonaktiebolaget and Acroud AB 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 Acroud AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Acroud AB.
Diversification Opportunities for Telefonaktiebolaget and Acroud AB
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and Acroud is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Acroud AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acroud 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 Acroud AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acroud AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Acroud AB go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Acroud AB
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.32 times more return on investment than Acroud AB. However, Telefonaktiebolaget LM Ericsson is 3.11 times less risky than Acroud AB. It trades about 0.2 of its potential returns per unit of risk. Acroud AB is currently generating about -0.11 per unit of risk. If you would invest 5,659 in Telefonaktiebolaget LM Ericsson on September 3, 2024 and sell it today you would earn a total of 3,231 from holding Telefonaktiebolaget LM Ericsson or generate 57.09% 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. Acroud AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| Acroud AB |
Telefonaktiebolaget and Acroud AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Acroud AB
The main advantage of trading using opposite Telefonaktiebolaget and Acroud AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Acroud AB 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 Acroud AB will offset losses from the drop in Acroud AB's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| Acroud AB vs. Kambi Group PLC | Acroud AB vs. Betsson AB | Acroud AB vs. Evolution AB | Acroud AB vs. Embracer 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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