Correlation Between Telefonaktiebolaget and Teradyne
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Teradyne 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 Teradyne 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 Teradyne, you can compare the effects of market volatilities on Telefonaktiebolaget and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Teradyne.
Diversification Opportunities for Telefonaktiebolaget and Teradyne
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and Teradyne is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Teradyne go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Teradyne
Given the investment horizon of 90 days Telefonaktiebolaget LM Ericsson is expected to generate 0.83 times more return on investment than Teradyne. However, Telefonaktiebolaget LM Ericsson is 1.21 times less risky than Teradyne. It trades about 0.12 of its potential returns per unit of risk. Teradyne is currently generating about -0.04 per unit of risk. If you would invest 718.00 in Telefonaktiebolaget LM Ericsson on September 12, 2024 and sell it today you would earn a total of 114.00 from holding Telefonaktiebolaget LM Ericsson or generate 15.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Teradyne
Performance |
| Timeline |
| Telefonaktiebolaget |
| Teradyne |
Telefonaktiebolaget and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Teradyne
The main advantage of trading using opposite Telefonaktiebolaget and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| Telefonaktiebolaget vs. Hewlett Packard Enterprise | Telefonaktiebolaget vs. Juniper Networks | Telefonaktiebolaget vs. Ciena Corp | Telefonaktiebolaget vs. Cisco Systems |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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