Correlation Between Telefonaktiebolaget and New Wave
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and New Wave 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 New Wave 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 New Wave Group, you can compare the effects of market volatilities on Telefonaktiebolaget and New Wave 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 New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and New Wave.
Diversification Opportunities for Telefonaktiebolaget and New Wave
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonaktiebolaget and New is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and New Wave Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Group 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 New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Group has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and New Wave go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and New Wave
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.29 times more return on investment than New Wave. However, Telefonaktiebolaget LM Ericsson is 3.5 times less risky than New Wave. It trades about -0.07 of its potential returns per unit of risk. New Wave Group is currently generating about -0.29 per unit of risk. If you would invest 9,100 in Telefonaktiebolaget LM Ericsson on August 29, 2024 and sell it today you would lose (110.00) from holding Telefonaktiebolaget LM Ericsson or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. New Wave Group
Performance |
| Timeline |
| Telefonaktiebolaget |
| New Wave Group |
Telefonaktiebolaget and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and New Wave
The main advantage of trading using opposite Telefonaktiebolaget and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.| Telefonaktiebolaget vs. New Wave Group | Telefonaktiebolaget vs. Cantargia AB | Telefonaktiebolaget vs. Enea AB | Telefonaktiebolaget vs. Proact IT Group |
| New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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