Correlation Between L E and Catella AB
Can any of the company-specific risk be diversified away by investing in both L E and Catella 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 L E and Catella AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L E Lundbergfretagen and Catella AB A, you can compare the effects of market volatilities on L E and Catella 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 L E with a short position of Catella AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of L E and Catella AB.
Diversification Opportunities for L E and Catella AB
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LUND-B and Catella is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding L E Lundbergfretagen and Catella AB A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB A and L E 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 L E Lundbergfretagen are associated (or correlated) with Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB A has no effect on the direction of L E i.e., L E and Catella AB go up and down completely randomly.
Pair Corralation between L E and Catella AB
Assuming the 90 days trading horizon L E Lundbergfretagen is expected to generate 0.3 times more return on investment than Catella AB. However, L E Lundbergfretagen is 3.31 times less risky than Catella AB. It trades about -0.11 of its potential returns per unit of risk. Catella AB A is currently generating about -0.11 per unit of risk. If you would invest 52,750 in L E Lundbergfretagen on September 14, 2024 and sell it today you would lose (1,150) from holding L E Lundbergfretagen or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
L E Lundbergfretagen vs. Catella AB A
Performance |
| Timeline |
| L E Lundbergfretagen |
| Catella AB A |
L E and Catella AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L E and Catella AB
The main advantage of trading using opposite L E and Catella AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L E position performs unexpectedly, Catella 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 Catella AB will offset losses from the drop in Catella AB's long position.| L E vs. Investment AB Latour | L E vs. Industrivarden AB ser | L E vs. Kinnevik Investment AB | L E vs. Investor AB ser |
| Catella AB vs. Catella AB | Catella AB vs. Svolder AB | Catella AB vs. Beijer Alma AB | Catella AB vs. BTS Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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