Correlation Between OMX Stockholm and Telefonaktiebolaget
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By analyzing existing cross correlation between OMX Stockholm Mid and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on OMX Stockholm and Telefonaktiebolaget 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 OMX Stockholm with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Stockholm and Telefonaktiebolaget.
Diversification Opportunities for OMX Stockholm and Telefonaktiebolaget
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OMX and Telefonaktiebolaget is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding OMX Stockholm Mid and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and OMX Stockholm 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 OMX Stockholm Mid are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of OMX Stockholm i.e., OMX Stockholm and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between OMX Stockholm and Telefonaktiebolaget
Assuming the 90 days trading horizon OMX Stockholm Mid is expected to under-perform the Telefonaktiebolaget. But the index apears to be less risky and, when comparing its historical volatility, OMX Stockholm Mid is 2.12 times less risky than Telefonaktiebolaget. The index trades about -0.06 of its potential returns per unit of risk. The Telefonaktiebolaget LM Ericsson is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,457 in Telefonaktiebolaget LM Ericsson on August 28, 2024 and sell it today you would earn a total of 1,533 from holding Telefonaktiebolaget LM Ericsson or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OMX Stockholm Mid vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
OMX Stockholm and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
OMX Stockholm Mid
Pair trading matchups for OMX Stockholm
Telefonaktiebolaget LM Ericsson
Pair trading matchups for Telefonaktiebolaget
Pair Trading with OMX Stockholm and Telefonaktiebolaget
The main advantage of trading using opposite OMX Stockholm and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OMX Stockholm position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| OMX Stockholm vs. Skandinaviska Enskilda Banken | OMX Stockholm vs. Indutrade AB | OMX Stockholm vs. Arion banki hf | OMX Stockholm vs. Fractal Gaming Group |
| Telefonaktiebolaget vs. New Wave Group | Telefonaktiebolaget vs. Cantargia AB | Telefonaktiebolaget vs. Enea AB | Telefonaktiebolaget vs. Proact IT Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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