Correlation Between L E and Nordic Asia
Can any of the company-specific risk be diversified away by investing in both L E and Nordic Asia 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 Nordic Asia 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 Nordic Asia Investment, you can compare the effects of market volatilities on L E and Nordic Asia 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 Nordic Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of L E and Nordic Asia.
Diversification Opportunities for L E and Nordic Asia
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LUND-B and Nordic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding L E Lundbergfretagen and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment 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 Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of L E i.e., L E and Nordic Asia go up and down completely randomly.
Pair Corralation between L E and Nordic Asia
Assuming the 90 days trading horizon L E Lundbergfretagen is expected to under-perform the Nordic Asia. But the stock apears to be less risky and, when comparing its historical volatility, L E Lundbergfretagen is 3.2 times less risky than Nordic Asia. The stock trades about -0.08 of its potential returns per unit of risk. The Nordic Asia Investment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 284.00 in Nordic Asia Investment on September 3, 2024 and sell it today you would lose (3.00) from holding Nordic Asia Investment or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L E Lundbergfretagen vs. Nordic Asia Investment
Performance |
| Timeline |
| L E Lundbergfretagen |
| Nordic Asia Investment |
L E and Nordic Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L E and Nordic Asia
The main advantage of trading using opposite L E and Nordic Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L E position performs unexpectedly, Nordic Asia 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 Nordic Asia will offset losses from the drop in Nordic Asia'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 |
| Nordic Asia vs. L E Lundbergfretagen | Nordic Asia vs. Industrivarden AB ser | Nordic Asia vs. Svenska Handelsbanken AB | Nordic Asia vs. Investment AB Latour |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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