Correlation Between Ratos AB and L E
Can any of the company-specific risk be diversified away by investing in both Ratos AB and L E 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 Ratos AB and L E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ratos AB and L E Lundbergfretagen, you can compare the effects of market volatilities on Ratos AB and L E 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 Ratos AB with a short position of L E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratos AB and L E.
Diversification Opportunities for Ratos AB and L E
Very poor diversification
The 3 months correlation between Ratos and LUND-B is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ratos AB and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen and Ratos AB 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 Ratos AB are associated (or correlated) with L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of Ratos AB i.e., Ratos AB and L E go up and down completely randomly.
Pair Corralation between Ratos AB and L E
Assuming the 90 days trading horizon Ratos AB is expected to generate 1.17 times more return on investment than L E. However, Ratos AB is 1.17 times more volatile than L E Lundbergfretagen. It trades about 0.45 of its potential returns per unit of risk. L E Lundbergfretagen is currently generating about 0.32 per unit of risk. If you would invest 3,104 in Ratos AB on October 25, 2024 and sell it today you would earn a total of 256.00 from holding Ratos AB or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ratos AB vs. L E Lundbergfretagen
Performance |
| Timeline |
| Ratos AB |
| L E Lundbergfretagen |
Ratos AB and L E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ratos AB and L E
The main advantage of trading using opposite Ratos AB and L E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratos AB position performs unexpectedly, L E 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 L E will offset losses from the drop in L E's long position.| Ratos AB vs. Kinnevik Investment AB | Ratos AB vs. L E Lundbergfretagen | Ratos AB vs. Investment AB Latour | Ratos AB vs. Industrivarden AB ser |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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