Correlation Between Investment and TF Bank
Can any of the company-specific risk be diversified away by investing in both Investment and TF Bank 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 Investment and TF Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Oresund and TF Bank AB, you can compare the effects of market volatilities on Investment and TF Bank 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 Investment with a short position of TF Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and TF Bank.
Diversification Opportunities for Investment and TF Bank
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Investment and TFBANK is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund and TF Bank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TF Bank AB and Investment 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 Investment AB Oresund are associated (or correlated) with TF Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TF Bank AB has no effect on the direction of Investment i.e., Investment and TF Bank go up and down completely randomly.
Pair Corralation between Investment and TF Bank
Assuming the 90 days trading horizon Investment AB Oresund is expected to under-perform the TF Bank. But the stock apears to be less risky and, when comparing its historical volatility, Investment AB Oresund is 1.82 times less risky than TF Bank. The stock trades about -0.17 of its potential returns per unit of risk. The TF Bank AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 32,400 in TF Bank AB on September 12, 2024 and sell it today you would earn a total of 2,900 from holding TF Bank AB or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Oresund vs. TF Bank AB
Performance |
| Timeline |
| Investment AB Oresund |
| TF Bank AB |
Investment and TF Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and TF Bank
The main advantage of trading using opposite Investment and TF Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, TF Bank 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 TF Bank will offset losses from the drop in TF Bank's long position.| Investment vs. Bure Equity AB | Investment vs. Creades AB | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| TF Bank vs. Koninklijke Heijmans NV | TF Bank vs. Trelleborg AB | TF Bank vs. Ferronordic AB | TF Bank vs. KABE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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