Correlation Between Telefonaktiebolaget and AddLife AB
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and AddLife 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 AddLife 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 AddLife AB, you can compare the effects of market volatilities on Telefonaktiebolaget and AddLife 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 AddLife AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and AddLife AB.
Diversification Opportunities for Telefonaktiebolaget and AddLife AB
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telefonaktiebolaget and AddLife is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife 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 AddLife AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddLife AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and AddLife AB go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and AddLife AB
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.46 times more return on investment than AddLife AB. However, Telefonaktiebolaget LM Ericsson is 2.16 times less risky than AddLife AB. It trades about -0.09 of its potential returns per unit of risk. AddLife AB is currently generating about -0.06 per unit of risk. If you would invest 9,030 in Telefonaktiebolaget LM Ericsson on August 26, 2024 and sell it today you would lose (140.00) from holding Telefonaktiebolaget LM Ericsson or give up 1.55% 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. AddLife AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| AddLife AB |
Telefonaktiebolaget and AddLife AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and AddLife AB
The main advantage of trading using opposite Telefonaktiebolaget and AddLife AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, AddLife 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 AddLife AB will offset losses from the drop in AddLife AB's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| AddLife AB vs. Addtech AB | AddLife AB vs. Lifco AB | AddLife AB vs. Indutrade AB | AddLife AB vs. Lagercrantz 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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