Correlation Between Telefonaktiebolaget and NV Bekaert
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and NV Bekaert 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 NV Bekaert 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 NV Bekaert SA, you can compare the effects of market volatilities on Telefonaktiebolaget and NV Bekaert 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 NV Bekaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and NV Bekaert.
Diversification Opportunities for Telefonaktiebolaget and NV Bekaert
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telefonaktiebolaget and BEKAY is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA 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 NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and NV Bekaert go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and NV Bekaert
Given the investment horizon of 90 days Telefonaktiebolaget LM Ericsson is expected to generate 0.7 times more return on investment than NV Bekaert. However, Telefonaktiebolaget LM Ericsson is 1.43 times less risky than NV Bekaert. It trades about 0.04 of its potential returns per unit of risk. NV Bekaert SA is currently generating about 0.02 per unit of risk. If you would invest 603.00 in Telefonaktiebolaget LM Ericsson on September 3, 2024 and sell it today you would earn a total of 219.00 from holding Telefonaktiebolaget LM Ericsson or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 61.62% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. NV Bekaert SA
Performance |
| Timeline |
| Telefonaktiebolaget |
| NV Bekaert SA |
Telefonaktiebolaget and NV Bekaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and NV Bekaert
The main advantage of trading using opposite Telefonaktiebolaget and NV Bekaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, NV Bekaert 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 NV Bekaert will offset losses from the drop in NV Bekaert's long position.| Telefonaktiebolaget vs. Hewlett Packard Enterprise | Telefonaktiebolaget vs. Juniper Networks | Telefonaktiebolaget vs. Motorola Solutions | Telefonaktiebolaget vs. Cisco Systems |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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