Correlation Between Telefonaktiebolaget and Valens
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Valens 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 Valens 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 Valens, you can compare the effects of market volatilities on Telefonaktiebolaget and Valens 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 Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Valens.
Diversification Opportunities for Telefonaktiebolaget and Valens
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonaktiebolaget and Valens is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Valens go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Valens
Given the investment horizon of 90 days Telefonaktiebolaget LM Ericsson is expected to generate 0.51 times more return on investment than Valens. However, Telefonaktiebolaget LM Ericsson is 1.95 times less risky than Valens. It trades about 0.1 of its potential returns per unit of risk. Valens is currently generating about 0.0 per unit of risk. If you would invest 477.00 in Telefonaktiebolaget LM Ericsson on September 12, 2024 and sell it today you would earn a total of 355.00 from holding Telefonaktiebolaget LM Ericsson or generate 74.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Valens
Performance |
| Timeline |
| Telefonaktiebolaget |
| Valens |
Telefonaktiebolaget and Valens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Valens
The main advantage of trading using opposite Telefonaktiebolaget and Valens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Valens 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 Valens will offset losses from the drop in Valens' long position.| Telefonaktiebolaget vs. Hewlett Packard Enterprise | Telefonaktiebolaget vs. Juniper Networks | Telefonaktiebolaget vs. Ciena Corp | Telefonaktiebolaget vs. Cisco Systems |
| Valens vs. NVIDIA | Valens vs. Taiwan Semiconductor Manufacturing | Valens vs. Micron Technology | Valens vs. Qualcomm Incorporated |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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