Correlation Between Tele2 AB and Alfa Laval
Can any of the company-specific risk be diversified away by investing in both Tele2 AB and Alfa Laval 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 Tele2 AB and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tele2 AB and Alfa Laval AB, you can compare the effects of market volatilities on Tele2 AB and Alfa Laval 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 Tele2 AB with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and Alfa Laval.
Diversification Opportunities for Tele2 AB and Alfa Laval
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tele2 and Alfa is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and Tele2 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 Tele2 AB are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of Tele2 AB i.e., Tele2 AB and Alfa Laval go up and down completely randomly.
Pair Corralation between Tele2 AB and Alfa Laval
Assuming the 90 days trading horizon Tele2 AB is expected to generate 0.99 times more return on investment than Alfa Laval. However, Tele2 AB is 1.01 times less risky than Alfa Laval. It trades about 0.07 of its potential returns per unit of risk. Alfa Laval AB is currently generating about 0.06 per unit of risk. If you would invest 8,018 in Tele2 AB on September 1, 2024 and sell it today you would earn a total of 3,427 from holding Tele2 AB or generate 42.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Tele2 AB vs. Alfa Laval AB
Performance |
| Timeline |
| Tele2 AB |
| Alfa Laval AB |
Tele2 AB and Alfa Laval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tele2 AB and Alfa Laval
The main advantage of trading using opposite Tele2 AB and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, Alfa Laval 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 Alfa Laval will offset losses from the drop in Alfa Laval's long position.| Tele2 AB vs. Telia Company AB | Tele2 AB vs. Skanska AB | Tele2 AB vs. AB Electrolux | Tele2 AB vs. Svenska Handelsbanken AB |
| Alfa Laval vs. Sandvik AB | Alfa Laval vs. AB SKF | Alfa Laval vs. ASSA ABLOY AB | Alfa Laval vs. Atlas Copco 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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