Correlation Between Sweco AB and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Sweco AB 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 Sweco AB and Tele2 AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweco AB and Tele2 AB, you can compare the effects of market volatilities on Sweco AB 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 Sweco AB with a short position of Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweco AB and Tele2 AB.
Diversification Opportunities for Sweco AB and Tele2 AB
Good diversification
The 3 months correlation between Sweco and Tele2 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sweco AB and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 AB and Sweco 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 Sweco AB 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 Sweco AB i.e., Sweco AB and Tele2 AB go up and down completely randomly.
Pair Corralation between Sweco AB and Tele2 AB
Assuming the 90 days trading horizon Sweco AB is expected to generate 1.01 times more return on investment than Tele2 AB. However, Sweco AB is 1.01 times more volatile than Tele2 AB. It trades about 0.06 of its potential returns per unit of risk. Tele2 AB is currently generating about 0.05 per unit of risk. If you would invest 14,680 in Sweco AB on September 3, 2024 and sell it today you would earn a total of 1,690 from holding Sweco AB or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sweco AB vs. Tele2 AB
Performance |
| Timeline |
| Sweco AB |
| Tele2 AB |
Sweco AB and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweco AB and Tele2 AB
The main advantage of trading using opposite Sweco AB and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweco AB 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.| Sweco AB vs. Indutrade AB | Sweco AB vs. Beijer Ref AB | Sweco AB vs. Addtech AB | Sweco AB vs. NIBE Industrier AB |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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