Correlation Between Telefonaktiebolaget and Wallenstam
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Wallenstam 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 Wallenstam 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 Wallenstam AB, you can compare the effects of market volatilities on Telefonaktiebolaget and Wallenstam 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 Wallenstam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Wallenstam.
Diversification Opportunities for Telefonaktiebolaget and Wallenstam
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telefonaktiebolaget and Wallenstam is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Wallenstam AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallenstam 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 Wallenstam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallenstam AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Wallenstam go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Wallenstam
Assuming the 90 days trading horizon Telefonaktiebolaget is expected to generate 1.01 times less return on investment than Wallenstam. In addition to that, Telefonaktiebolaget is 1.41 times more volatile than Wallenstam AB. It trades about 0.3 of its total potential returns per unit of risk. Wallenstam AB is currently generating about 0.43 per unit of volatility. If you would invest 4,086 in Wallenstam AB on February 6, 2025 and sell it today you would earn a total of 674.00 from holding Wallenstam AB or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Wallenstam AB
Performance |
| Timeline |
| Telefonaktiebolaget |
| Wallenstam AB |
Telefonaktiebolaget and Wallenstam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Wallenstam
The main advantage of trading using opposite Telefonaktiebolaget and Wallenstam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Wallenstam 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 Wallenstam will offset losses from the drop in Wallenstam's long position.| Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
| Wallenstam vs. Fabege AB | Wallenstam vs. Fastighets AB Balder | Wallenstam vs. Hufvudstaden AB | Wallenstam vs. Castellum 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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