Correlation Between L E and Linc AB
Can any of the company-specific risk be diversified away by investing in both L E 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 L E and Linc 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 Linc AB, you can compare the effects of market volatilities on L E 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 L E with a short position of Linc AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of L E and Linc AB.
Diversification Opportunities for L E and Linc AB
Pay attention - limited upside
The 3 months correlation between LUND-B and Linc is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding L E Lundbergfretagen and Linc AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linc AB 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 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 L E i.e., L E and Linc AB go up and down completely randomly.
Pair Corralation between L E and Linc AB
Assuming the 90 days trading horizon L E Lundbergfretagen is expected to generate 0.31 times more return on investment than Linc AB. However, L E Lundbergfretagen is 3.19 times less risky than Linc AB. It trades about 0.15 of its potential returns per unit of risk. Linc AB is currently generating about -0.11 per unit of risk. If you would invest 50,100 in L E Lundbergfretagen on November 30, 2024 and sell it today you would earn a total of 3,500 from holding L E Lundbergfretagen or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
L E Lundbergfretagen vs. Linc AB
Performance |
| Timeline |
| L E Lundbergfretagen |
| Linc AB |
L E and Linc AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L E and Linc AB
The main advantage of trading using opposite L E and Linc AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L E 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.| L E vs. Investment AB Latour | L E vs. Industrivarden AB ser | L E vs. Kinnevik Investment AB | L E vs. Investor AB ser |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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