Correlation Between Lipum AB and Essity AB
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By analyzing existing cross correlation between Lipum AB and Essity AB, you can compare the effects of market volatilities on Lipum AB and Essity 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 Essity AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and Essity AB.
Diversification Opportunities for Lipum AB and Essity AB
Excellent diversification
The 3 months correlation between Lipum and Essity is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Essity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essity 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 Essity AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essity AB has no effect on the direction of Lipum AB i.e., Lipum AB and Essity AB go up and down completely randomly.
Pair Corralation between Lipum AB and Essity AB
Assuming the 90 days trading horizon Lipum AB is expected to generate 1.9 times more return on investment than Essity AB. However, Lipum AB is 1.9 times more volatile than Essity AB. It trades about 0.3 of its potential returns per unit of risk. Essity AB is currently generating about 0.0 per unit of risk. If you would invest 1,400 in Lipum AB on August 26, 2024 and sell it today you would earn a total of 270.00 from holding Lipum AB or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipum AB vs. Essity AB
Performance |
| Timeline |
| Lipum AB |
| Essity AB |
Lipum AB and Essity AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and Essity AB
The main advantage of trading using opposite Lipum AB and Essity AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, Essity 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 Essity AB will offset losses from the drop in Essity AB's long position.The idea behind Lipum AB and Essity 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.| Essity AB vs. Essity AB | Essity AB vs. Svenska Cellulosa Aktiebolaget | Essity AB vs. Industrivarden AB ser | Essity AB vs. Svenska Cellulosa Aktiebolaget |
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..
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