Correlation Between Lassila Tikanoja and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Lassila Tikanoja 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 Lassila Tikanoja and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lassila Tikanoja Oyj and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Lassila Tikanoja 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 Lassila Tikanoja with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lassila Tikanoja and Telefonaktiebolaget.
Diversification Opportunities for Lassila Tikanoja and Telefonaktiebolaget
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lassila and Telefonaktiebolaget is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lassila Tikanoja Oyj and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and Lassila Tikanoja 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 Lassila Tikanoja 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 Lassila Tikanoja i.e., Lassila Tikanoja and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Lassila Tikanoja and Telefonaktiebolaget
Assuming the 90 days trading horizon Lassila Tikanoja Oyj is expected to under-perform the Telefonaktiebolaget. But the stock apears to be less risky and, when comparing its historical volatility, Lassila Tikanoja Oyj is 1.73 times less risky than Telefonaktiebolaget. The stock trades about -0.02 of its potential returns per unit of risk. The Telefonaktiebolaget LM Ericsson is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 540.00 in Telefonaktiebolaget LM Ericsson on September 5, 2024 and sell it today you would earn a total of 239.00 from holding Telefonaktiebolaget LM Ericsson or generate 44.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lassila Tikanoja Oyj vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Lassila Tikanoja Oyj |
| Telefonaktiebolaget |
Lassila Tikanoja and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lassila Tikanoja and Telefonaktiebolaget
The main advantage of trading using opposite Lassila Tikanoja and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lassila Tikanoja 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.| Lassila Tikanoja vs. Telefonaktiebolaget LM Ericsson | Lassila Tikanoja vs. Telia Company AB | Lassila Tikanoja vs. SSAB AB ser | Lassila Tikanoja vs. SSAB AB ser |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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