Correlation Between Exel Composites and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Exel Composites and Telefonaktiebolaget 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 Exel Composites and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exel Composites Oyj and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Exel Composites and Telefonaktiebolaget 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 Exel Composites with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exel Composites and Telefonaktiebolaget.
Diversification Opportunities for Exel Composites and Telefonaktiebolaget
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exel and Telefonaktiebolaget is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Exel Composites Oyj and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and Exel Composites 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 Exel Composites Oyj are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Exel Composites i.e., Exel Composites and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Exel Composites and Telefonaktiebolaget
Assuming the 90 days trading horizon Exel Composites Oyj is expected to generate 3.94 times more return on investment than Telefonaktiebolaget. However, Exel Composites is 3.94 times more volatile than Telefonaktiebolaget LM Ericsson. It trades about 0.06 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.23 per unit of risk. If you would invest 30.00 in Exel Composites Oyj on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Exel Composites Oyj or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exel Composites Oyj vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Exel Composites Oyj |
| Telefonaktiebolaget |
Exel Composites and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exel Composites and Telefonaktiebolaget
The main advantage of trading using opposite Exel Composites and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exel Composites position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| Exel Composites vs. Telefonaktiebolaget LM Ericsson | Exel Composites vs. KONE Oyj | Exel Composites vs. Nordea Bank Abp | Exel Composites vs. TietoEVRY Corp |
| Telefonaktiebolaget vs. Telia Company AB | Telefonaktiebolaget vs. SSAB AB ser | Telefonaktiebolaget vs. Kesko Oyj | Telefonaktiebolaget vs. Stora Enso Oyj |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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