Correlation Between Lipum AB and Bulten AB
Can any of the company-specific risk be diversified away by investing in both Lipum AB and Bulten 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 Lipum AB and Bulten AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipum AB and Bulten AB, you can compare the effects of market volatilities on Lipum AB and Bulten 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 Lipum AB with a short position of Bulten AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and Bulten AB.
Diversification Opportunities for Lipum AB and Bulten AB
Very good diversification
The 3 months correlation between Lipum and Bulten is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Bulten AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bulten AB and Lipum AB 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 Lipum AB are associated (or correlated) with Bulten AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bulten AB has no effect on the direction of Lipum AB i.e., Lipum AB and Bulten AB go up and down completely randomly.
Pair Corralation between Lipum AB and Bulten AB
Assuming the 90 days trading horizon Lipum AB is expected to generate 2.35 times more return on investment than Bulten AB. However, Lipum AB is 2.35 times more volatile than Bulten AB. It trades about 0.08 of its potential returns per unit of risk. Bulten AB is currently generating about 0.03 per unit of risk. If you would invest 844.00 in Lipum AB on August 26, 2024 and sell it today you would earn a total of 826.00 from holding Lipum AB or generate 97.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipum AB vs. Bulten AB
Performance |
| Timeline |
| Lipum AB |
| Bulten AB |
Lipum AB and Bulten AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and Bulten AB
The main advantage of trading using opposite Lipum AB and Bulten AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, Bulten 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 Bulten AB will offset losses from the drop in Bulten AB's long position.The idea behind Lipum AB and Bulten AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bulten AB vs. New Wave Group | Bulten AB vs. Clas Ohlson AB | Bulten AB vs. BE Group AB | Bulten AB vs. Betsson 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |