Correlation Between Telefonaktiebolaget and PolyPlank Publ
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and PolyPlank Publ 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 PolyPlank Publ 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 PolyPlank publ AB, you can compare the effects of market volatilities on Telefonaktiebolaget and PolyPlank Publ 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 PolyPlank Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and PolyPlank Publ.
Diversification Opportunities for Telefonaktiebolaget and PolyPlank Publ
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telefonaktiebolaget and PolyPlank is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and PolyPlank publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PolyPlank publ 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 PolyPlank Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PolyPlank publ AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and PolyPlank Publ go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and PolyPlank Publ
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.49 times more return on investment than PolyPlank Publ. However, Telefonaktiebolaget LM Ericsson is 2.06 times less risky than PolyPlank Publ. It trades about -0.08 of its potential returns per unit of risk. PolyPlank publ AB is currently generating about -0.13 per unit of risk. If you would invest 9,180 in Telefonaktiebolaget LM Ericsson on November 5, 2024 and sell it today you would lose (790.00) from holding Telefonaktiebolaget LM Ericsson or give up 8.61% 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. PolyPlank publ AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| PolyPlank publ AB |
Telefonaktiebolaget and PolyPlank Publ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and PolyPlank Publ
The main advantage of trading using opposite Telefonaktiebolaget and PolyPlank Publ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, PolyPlank Publ 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 PolyPlank Publ will offset losses from the drop in PolyPlank Publ's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| PolyPlank Publ vs. Inwido AB | PolyPlank Publ vs. Byggmax Group AB | PolyPlank Publ vs. AQ Group AB | PolyPlank Publ vs. Garo 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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