Correlation Between Svenska Cellulosa and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Svenska Cellulosa and Tele2 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 Svenska Cellulosa and Tele2 AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Cellulosa Aktiebolaget and Tele2 AB, you can compare the effects of market volatilities on Svenska Cellulosa and Tele2 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 Svenska Cellulosa with a short position of Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Cellulosa and Tele2 AB.
Diversification Opportunities for Svenska Cellulosa and Tele2 AB
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Svenska and Tele2 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Cellulosa Aktiebolaget and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 AB and Svenska Cellulosa 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 Svenska Cellulosa Aktiebolaget are associated (or correlated) with Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of Svenska Cellulosa i.e., Svenska Cellulosa and Tele2 AB go up and down completely randomly.
Pair Corralation between Svenska Cellulosa and Tele2 AB
Assuming the 90 days trading horizon Svenska Cellulosa is expected to generate 8.06 times less return on investment than Tele2 AB. But when comparing it to its historical volatility, Svenska Cellulosa Aktiebolaget is 1.75 times less risky than Tele2 AB. It trades about 0.01 of its potential returns per unit of risk. Tele2 AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,414 in Tele2 AB on August 30, 2024 and sell it today you would earn a total of 2,886 from holding Tele2 AB or generate 34.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.79% |
| Values | Daily Returns |
Svenska Cellulosa Aktiebolaget vs. Tele2 AB
Performance |
| Timeline |
| Svenska Cellulosa |
| Tele2 AB |
Svenska Cellulosa and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Cellulosa and Tele2 AB
The main advantage of trading using opposite Svenska Cellulosa and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Cellulosa position performs unexpectedly, Tele2 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| Svenska Cellulosa vs. Svenska Cellulosa Aktiebolaget | Svenska Cellulosa vs. Holmen AB | Svenska Cellulosa vs. Industrivarden AB ser | Svenska Cellulosa vs. Stora Enso Oyj |
| Tele2 AB vs. Tele2 AB | Tele2 AB vs. AB SKF | Tele2 AB vs. Svenska Cellulosa Aktiebolaget | Tele2 AB vs. Holmen 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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