Correlation Between Evolution and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Evolution and Tele2 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 Evolution and Tele2 AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and Tele2 AB, you can compare the effects of market volatilities on Evolution and Tele2 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 Evolution with a short position of Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and Tele2 AB.
Diversification Opportunities for Evolution and Tele2 AB
Weak diversification
The 3 months correlation between Evolution and Tele2 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 AB and Evolution 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 Evolution AB are associated (or correlated) with Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of Evolution i.e., Evolution and Tele2 AB go up and down completely randomly.
Pair Corralation between Evolution and Tele2 AB
Assuming the 90 days trading horizon Evolution is expected to generate 185.0 times less return on investment than Tele2 AB. In addition to that, Evolution is 1.34 times more volatile than Tele2 AB. It trades about 0.0 of its total potential returns per unit of risk. Tele2 AB is currently generating about 0.05 per unit of volatility. If you would invest 8,163 in Tele2 AB on August 29, 2024 and sell it today you would earn a total of 3,097 from holding Tele2 AB or generate 37.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution AB vs. Tele2 AB
Performance |
| Timeline |
| Evolution AB |
| Tele2 AB |
Evolution and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and Tele2 AB
The main advantage of trading using opposite Evolution and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution position performs unexpectedly, Tele2 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| Evolution vs. Embracer Group AB | Evolution vs. Sinch AB | Evolution vs. Kambi Group PLC | Evolution vs. Samhllsbyggnadsbolaget i Norden |
| Tele2 AB vs. Telia Company AB | Tele2 AB vs. Skanska AB | Tele2 AB vs. AB Electrolux | Tele2 AB vs. Svenska Handelsbanken 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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