Correlation Between Indutrade and Teqnion AB
Can any of the company-specific risk be diversified away by investing in both Indutrade and Teqnion 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 Indutrade and Teqnion AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Teqnion AB, you can compare the effects of market volatilities on Indutrade and Teqnion 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 Indutrade with a short position of Teqnion AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Teqnion AB.
Diversification Opportunities for Indutrade and Teqnion AB
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indutrade and Teqnion is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Teqnion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teqnion AB and Indutrade 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 Indutrade AB are associated (or correlated) with Teqnion AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teqnion AB has no effect on the direction of Indutrade i.e., Indutrade and Teqnion AB go up and down completely randomly.
Pair Corralation between Indutrade and Teqnion AB
Assuming the 90 days trading horizon Indutrade AB is expected to generate 1.35 times more return on investment than Teqnion AB. However, Indutrade is 1.35 times more volatile than Teqnion AB. It trades about -0.25 of its potential returns per unit of risk. Teqnion AB is currently generating about -0.66 per unit of risk. If you would invest 29,700 in Indutrade AB on August 29, 2024 and sell it today you would lose (2,240) from holding Indutrade AB or give up 7.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. Teqnion AB
Performance |
| Timeline |
| Indutrade AB |
| Teqnion AB |
Indutrade and Teqnion AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Teqnion AB
The main advantage of trading using opposite Indutrade and Teqnion AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Teqnion 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 Teqnion AB will offset losses from the drop in Teqnion AB's long position.| Indutrade vs. Lifco AB | Indutrade vs. Addtech AB | Indutrade vs. NIBE Industrier AB | Indutrade vs. Investment AB Latour |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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