Correlation Between Tele2 AB and EQT AB
Can any of the company-specific risk be diversified away by investing in both Tele2 AB and EQT 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 Tele2 AB and EQT AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tele2 AB and EQT AB, you can compare the effects of market volatilities on Tele2 AB and EQT 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 Tele2 AB with a short position of EQT AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and EQT AB.
Diversification Opportunities for Tele2 AB and EQT AB
Modest diversification
The 3 months correlation between Tele2 and EQT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and EQT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT 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 EQT AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT AB has no effect on the direction of Tele2 AB i.e., Tele2 AB and EQT AB go up and down completely randomly.
Pair Corralation between Tele2 AB and EQT AB
Assuming the 90 days trading horizon Tele2 AB is expected to generate 3.64 times less return on investment than EQT AB. But when comparing it to its historical volatility, Tele2 AB is 2.41 times less risky than EQT AB. It trades about 0.12 of its potential returns per unit of risk. EQT AB is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 30,644 in EQT AB on September 2, 2024 and sell it today you would earn a total of 2,406 from holding EQT AB or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tele2 AB vs. EQT AB
Performance |
| Timeline |
| Tele2 AB |
| EQT AB |
Tele2 AB and EQT AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tele2 AB and EQT AB
The main advantage of trading using opposite Tele2 AB and EQT AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, EQT 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 EQT AB will offset losses from the drop in EQT AB'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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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