Correlation Between Telefonaktiebolaget and Biotage AB
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Biotage 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 Biotage 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 Biotage AB, you can compare the effects of market volatilities on Telefonaktiebolaget and Biotage 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 Biotage AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Biotage AB.
Diversification Opportunities for Telefonaktiebolaget and Biotage AB
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telefonaktiebolaget and Biotage is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Biotage AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotage 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 Biotage AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotage AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Biotage AB go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Biotage AB
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 1.04 times more return on investment than Biotage AB. However, Telefonaktiebolaget is 1.04 times more volatile than Biotage AB. It trades about -0.09 of its potential returns per unit of risk. Biotage AB is currently generating about -0.17 per unit of risk. If you would invest 9,120 in Telefonaktiebolaget LM Ericsson on November 3, 2024 and sell it today you would lose (730.00) from holding Telefonaktiebolaget LM Ericsson or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Biotage AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| Biotage AB |
Telefonaktiebolaget and Biotage AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Biotage AB
The main advantage of trading using opposite Telefonaktiebolaget and Biotage AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Biotage 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 Biotage AB will offset losses from the drop in Biotage AB's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| Biotage AB vs. BioArctic AB | Biotage AB vs. Camurus AB | Biotage AB vs. Xvivo Perfusion AB | Biotage AB vs. Surgical Science Sweden |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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