Correlation Between Tele2 AB and Castellum
Can any of the company-specific risk be diversified away by investing in both Tele2 AB and Castellum 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 Castellum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tele2 AB and Castellum AB, you can compare the effects of market volatilities on Tele2 AB and Castellum 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 Castellum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and Castellum.
Diversification Opportunities for Tele2 AB and Castellum
Average diversification
The 3 months correlation between Tele2 and Castellum is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and Castellum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum 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 Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum AB has no effect on the direction of Tele2 AB i.e., Tele2 AB and Castellum go up and down completely randomly.
Pair Corralation between Tele2 AB and Castellum
Assuming the 90 days trading horizon Tele2 AB is expected to generate 0.6 times more return on investment than Castellum. However, Tele2 AB is 1.67 times less risky than Castellum. It trades about -0.04 of its potential returns per unit of risk. Castellum AB is currently generating about -0.32 per unit of risk. If you would invest 11,365 in Tele2 AB on August 29, 2024 and sell it today you would lose (105.00) from holding Tele2 AB or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tele2 AB vs. Castellum AB
Performance |
| Timeline |
| Tele2 AB |
| Castellum AB |
Tele2 AB and Castellum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tele2 AB and Castellum
The main advantage of trading using opposite Tele2 AB and Castellum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, Castellum 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 Castellum will offset losses from the drop in Castellum'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 |
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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