Correlation Between Investor and Telia Company
Can any of the company-specific risk be diversified away by investing in both Investor and Telia Company 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 Investor and Telia Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Telia Company AB, you can compare the effects of market volatilities on Investor and Telia Company 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 Investor with a short position of Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Telia Company.
Diversification Opportunities for Investor and Telia Company
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Investor and Telia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company and Investor 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 Investor AB ser are associated (or correlated) with Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Investor i.e., Investor and Telia Company go up and down completely randomly.
Pair Corralation between Investor and Telia Company
Assuming the 90 days trading horizon Investor AB ser is expected to under-perform the Telia Company. But the stock apears to be less risky and, when comparing its historical volatility, Investor AB ser is 1.7 times less risky than Telia Company. The stock trades about -0.08 of its potential returns per unit of risk. The Telia Company AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,115 in Telia Company AB on August 31, 2024 and sell it today you would earn a total of 101.00 from holding Telia Company AB or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. Telia Company AB
Performance |
| Timeline |
| Investor AB ser |
| Telia Company |
Investor and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Telia Company
The main advantage of trading using opposite Investor and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company's long position.| Investor vs. Kinnevik Investment AB | Investor vs. Investment AB Latour | Investor vs. Samhllsbyggnadsbolaget i Norden | Investor vs. Industrivarden AB ser |
| Telia Company vs. Tele2 AB | Telia Company vs. Swedbank AB | Telia Company vs. Svenska Handelsbanken AB | Telia Company vs. Nordea Bank Abp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |