Correlation Between Telefonaktiebolaget and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Nexam Chemical 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 Nexam Chemical 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 Nexam Chemical Holding, you can compare the effects of market volatilities on Telefonaktiebolaget and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Nexam Chemical.
Diversification Opportunities for Telefonaktiebolaget and Nexam Chemical
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and Nexam is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Nexam Chemical go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Nexam Chemical
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.46 times more return on investment than Nexam Chemical. However, Telefonaktiebolaget LM Ericsson is 2.15 times less risky than Nexam Chemical. It trades about 0.1 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about 0.04 per unit of risk. If you would invest 5,243 in Telefonaktiebolaget LM Ericsson on August 26, 2024 and sell it today you would earn a total of 3,647 from holding Telefonaktiebolaget LM Ericsson or generate 69.56% 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. Nexam Chemical Holding
Performance |
| Timeline |
| Telefonaktiebolaget |
| Nexam Chemical Holding |
Telefonaktiebolaget and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Nexam Chemical
The main advantage of trading using opposite Telefonaktiebolaget and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Kancera AB | Nexam Chemical vs. BIMobject AB | Nexam Chemical vs. KABE 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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