Correlation Between Investment and Linc AB
Can any of the company-specific risk be diversified away by investing in both Investment and Linc 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 Investment and Linc AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Latour and Linc AB, you can compare the effects of market volatilities on Investment and Linc 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 Investment with a short position of Linc AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Linc AB.
Diversification Opportunities for Investment and Linc AB
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investment and Linc is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and Linc AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linc AB and Investment 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 Investment AB Latour are associated (or correlated) with Linc AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linc AB has no effect on the direction of Investment i.e., Investment and Linc AB go up and down completely randomly.
Pair Corralation between Investment and Linc AB
Assuming the 90 days trading horizon Investment is expected to generate 2.0 times less return on investment than Linc AB. But when comparing it to its historical volatility, Investment AB Latour is 1.39 times less risky than Linc AB. It trades about 0.03 of its potential returns per unit of risk. Linc AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,430 in Linc AB on September 1, 2024 and sell it today you would earn a total of 960.00 from holding Linc AB or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Latour vs. Linc AB
Performance |
| Timeline |
| Investment AB Latour |
| Linc AB |
Investment and Linc AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Linc AB
The main advantage of trading using opposite Investment and Linc AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Linc 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 Linc AB will offset losses from the drop in Linc AB's long position.| Investment vs. Investor AB ser | Investment vs. Industrivarden AB ser | Investment vs. Tele2 AB | Investment vs. Boliden AB |
| Linc AB vs. Investor AB ser | Linc AB vs. Investment AB Latour | Linc AB vs. Industrivarden AB ser | Linc AB vs. Tele2 AB |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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