Correlation Between Telefonaktiebolaget and Investment
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Investment 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 Investment 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 Investment AB Oresund, you can compare the effects of market volatilities on Telefonaktiebolaget and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Investment.
Diversification Opportunities for Telefonaktiebolaget and Investment
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and Investment is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Investment AB Oresund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Oresund 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Oresund has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Investment go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Investment
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.54 times more return on investment than Investment. However, Telefonaktiebolaget LM Ericsson is 1.85 times less risky than Investment. It trades about -0.07 of its potential returns per unit of risk. Investment AB Oresund is currently generating about -0.13 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Investment AB Oresund
Performance |
| Timeline |
| Telefonaktiebolaget |
| Investment AB Oresund |
Telefonaktiebolaget and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Investment
The main advantage of trading using opposite Telefonaktiebolaget and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Telefonaktiebolaget vs. New Wave Group | Telefonaktiebolaget vs. Cantargia AB | Telefonaktiebolaget vs. Enea AB | Telefonaktiebolaget vs. Proact IT Group |
| Investment vs. Creades AB | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser | Investment vs. Investment AB Latour |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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