Correlation Between Telefonaktiebolaget and Sileon AB
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Sileon AB 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 Sileon AB 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 Sileon AB, you can compare the effects of market volatilities on Telefonaktiebolaget and Sileon AB 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 Sileon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Sileon AB.
Diversification Opportunities for Telefonaktiebolaget and Sileon AB
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telefonaktiebolaget and Sileon is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Sileon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sileon 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 Sileon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sileon AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Sileon AB go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Sileon AB
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.27 times more return on investment than Sileon AB. However, Telefonaktiebolaget LM Ericsson is 3.76 times less risky than Sileon AB. It trades about 0.06 of its potential returns per unit of risk. Sileon AB is currently generating about -0.08 per unit of risk. If you would invest 6,210 in Telefonaktiebolaget LM Ericsson on October 12, 2024 and sell it today you would earn a total of 3,200 from holding Telefonaktiebolaget LM Ericsson or generate 51.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Sileon AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| Sileon AB |
Telefonaktiebolaget and Sileon AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Sileon AB
The main advantage of trading using opposite Telefonaktiebolaget and Sileon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Sileon AB 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 Sileon AB will offset losses from the drop in Sileon AB's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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