Correlation Between Tele2 AB and Saab AB
Can any of the company-specific risk be diversified away by investing in both Tele2 AB and Saab 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 Saab 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 Saab AB, you can compare the effects of market volatilities on Tele2 AB and Saab 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 Saab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and Saab AB.
Diversification Opportunities for Tele2 AB and Saab AB
Good diversification
The 3 months correlation between Tele2 and Saab is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and Saab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saab 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 Saab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saab AB has no effect on the direction of Tele2 AB i.e., Tele2 AB and Saab AB go up and down completely randomly.
Pair Corralation between Tele2 AB and Saab AB
Assuming the 90 days trading horizon Tele2 AB is expected to generate 3.46 times less return on investment than Saab AB. But when comparing it to its historical volatility, Tele2 AB is 2.83 times less risky than Saab AB. It trades about 0.14 of its potential returns per unit of risk. Saab AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 21,910 in Saab AB on September 1, 2024 and sell it today you would earn a total of 1,975 from holding Saab AB or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tele2 AB vs. Saab AB
Performance |
| Timeline |
| Tele2 AB |
| Saab AB |
Tele2 AB and Saab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tele2 AB and Saab AB
The main advantage of trading using opposite Tele2 AB and Saab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, Saab 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 Saab AB will offset losses from the drop in Saab 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 |
| Saab AB vs. SSAB AB | Saab AB vs. Boliden AB | Saab AB vs. Sandvik AB | Saab AB vs. Telefonaktiebolaget LM Ericsson |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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