Correlation Between Telefonaktiebolaget and Resqunit
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Resqunit 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 Resqunit 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 Resqunit AB, you can compare the effects of market volatilities on Telefonaktiebolaget and Resqunit 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 Resqunit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Resqunit.
Diversification Opportunities for Telefonaktiebolaget and Resqunit
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonaktiebolaget and Resqunit is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Resqunit AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resqunit 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 Resqunit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resqunit AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Resqunit go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Resqunit
Assuming the 90 days trading horizon Telefonaktiebolaget is expected to generate 9.91 times less return on investment than Resqunit. But when comparing it to its historical volatility, Telefonaktiebolaget LM Ericsson is 10.98 times less risky than Resqunit. It trades about 0.04 of its potential returns per unit of risk. Resqunit AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 447.00 in Resqunit AB on September 4, 2024 and sell it today you would lose (427.00) from holding Resqunit AB or give up 95.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Resqunit AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| Resqunit AB |
Telefonaktiebolaget and Resqunit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Resqunit
The main advantage of trading using opposite Telefonaktiebolaget and Resqunit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Resqunit 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 Resqunit will offset losses from the drop in Resqunit's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| Resqunit vs. ZAZZ Energy of | Resqunit vs. Triboron International AB | Resqunit vs. NCAB Group | Resqunit vs. Vimian 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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