Correlation Between Telia Company and AB Electrolux
Can any of the company-specific risk be diversified away by investing in both Telia Company and AB Electrolux 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 Telia Company and AB Electrolux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telia Company AB and AB Electrolux, you can compare the effects of market volatilities on Telia Company and AB Electrolux 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 Telia Company with a short position of AB Electrolux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and AB Electrolux.
Diversification Opportunities for Telia Company and AB Electrolux
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Telia and ELUX-B is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and AB Electrolux in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Electrolux and Telia Company 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 Telia Company AB are associated (or correlated) with AB Electrolux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Electrolux has no effect on the direction of Telia Company i.e., Telia Company and AB Electrolux go up and down completely randomly.
Pair Corralation between Telia Company and AB Electrolux
Assuming the 90 days trading horizon Telia Company AB is expected to generate 0.56 times more return on investment than AB Electrolux. However, Telia Company AB is 1.77 times less risky than AB Electrolux. It trades about 0.39 of its potential returns per unit of risk. AB Electrolux is currently generating about 0.17 per unit of risk. If you would invest 3,011 in Telia Company AB on November 9, 2024 and sell it today you would earn a total of 339.00 from holding Telia Company AB or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telia Company AB vs. AB Electrolux
Performance |
| Timeline |
| Telia Company |
| AB Electrolux |
Telia Company and AB Electrolux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telia Company and AB Electrolux
The main advantage of trading using opposite Telia Company and AB Electrolux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company position performs unexpectedly, AB Electrolux 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 AB Electrolux will offset losses from the drop in AB Electrolux's long position.| Telia Company vs. Tele2 AB | Telia Company vs. Swedbank AB | Telia Company vs. Svenska Handelsbanken AB | Telia Company vs. Nordea Bank Abp |
| AB Electrolux vs. AB SKF | AB Electrolux vs. Tele2 AB | AB Electrolux vs. Sandvik AB | AB Electrolux vs. Skanska 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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