Correlation Between Lindab International and Trelleborg
Can any of the company-specific risk be diversified away by investing in both Lindab International and Trelleborg 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 Lindab International and Trelleborg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindab International AB and Trelleborg AB, you can compare the effects of market volatilities on Lindab International and Trelleborg 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 Lindab International with a short position of Trelleborg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindab International and Trelleborg.
Diversification Opportunities for Lindab International and Trelleborg
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lindab and Trelleborg is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lindab International AB and Trelleborg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trelleborg AB and Lindab International 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 Lindab International AB are associated (or correlated) with Trelleborg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trelleborg AB has no effect on the direction of Lindab International i.e., Lindab International and Trelleborg go up and down completely randomly.
Pair Corralation between Lindab International and Trelleborg
Assuming the 90 days trading horizon Lindab International AB is expected to generate 1.3 times more return on investment than Trelleborg. However, Lindab International is 1.3 times more volatile than Trelleborg AB. It trades about 0.06 of its potential returns per unit of risk. Trelleborg AB is currently generating about 0.07 per unit of risk. If you would invest 17,213 in Lindab International AB on September 1, 2024 and sell it today you would earn a total of 5,547 from holding Lindab International AB or generate 32.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindab International AB vs. Trelleborg AB
Performance |
| Timeline |
| Lindab International |
| Trelleborg AB |
Lindab International and Trelleborg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindab International and Trelleborg
The main advantage of trading using opposite Lindab International and Trelleborg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindab International position performs unexpectedly, Trelleborg 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 Trelleborg will offset losses from the drop in Trelleborg's long position.| Lindab International vs. Inwido AB | Lindab International vs. Nolato AB | Lindab International vs. Trelleborg AB | Lindab International vs. Peab AB |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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