Correlation Between Kesla Oyj and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Kesla Oyj 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 Kesla Oyj and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kesla Oyj A and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Kesla Oyj 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 Kesla Oyj with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesla Oyj and Telefonaktiebolaget.
Diversification Opportunities for Kesla Oyj and Telefonaktiebolaget
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kesla and Telefonaktiebolaget is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kesla Oyj A and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and Kesla Oyj 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 Kesla Oyj A 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 Kesla Oyj i.e., Kesla Oyj and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Kesla Oyj and Telefonaktiebolaget
Assuming the 90 days trading horizon Kesla Oyj A is expected to under-perform the Telefonaktiebolaget. In addition to that, Kesla Oyj is 1.16 times more volatile than Telefonaktiebolaget LM Ericsson. It trades about -0.02 of its total potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.16 per unit of volatility. If you would invest 567.00 in Telefonaktiebolaget LM Ericsson on September 1, 2024 and sell it today you would earn a total of 213.00 from holding Telefonaktiebolaget LM Ericsson or generate 37.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kesla Oyj A vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Kesla Oyj A |
| Telefonaktiebolaget |
Kesla Oyj and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kesla Oyj and Telefonaktiebolaget
The main advantage of trading using opposite Kesla Oyj and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesla Oyj 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.| Kesla Oyj vs. Honkarakenne Oyj B | Kesla Oyj vs. Innofactor Oyj | Kesla Oyj vs. Raute Oyj | Kesla Oyj vs. Exel Composites Oyj |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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