Correlation Between Teqnion AB and Indutrade
Can any of the company-specific risk be diversified away by investing in both Teqnion AB and Indutrade 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 Teqnion AB and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teqnion AB and Indutrade AB, you can compare the effects of market volatilities on Teqnion AB and Indutrade 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 Teqnion AB with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teqnion AB and Indutrade.
Diversification Opportunities for Teqnion AB and Indutrade
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teqnion and Indutrade is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Teqnion AB and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Teqnion 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 Teqnion AB are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Teqnion AB i.e., Teqnion AB and Indutrade go up and down completely randomly.
Pair Corralation between Teqnion AB and Indutrade
Assuming the 90 days trading horizon Teqnion AB is expected to under-perform the Indutrade. In addition to that, Teqnion AB is 1.45 times more volatile than Indutrade AB. It trades about -0.02 of its total potential returns per unit of risk. Indutrade AB is currently generating about 0.04 per unit of volatility. If you would invest 23,335 in Indutrade AB on August 28, 2024 and sell it today you would earn a total of 4,045 from holding Indutrade AB or generate 17.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teqnion AB vs. Indutrade AB
Performance |
| Timeline |
| Teqnion AB |
| Indutrade AB |
Teqnion AB and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teqnion AB and Indutrade
The main advantage of trading using opposite Teqnion AB and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teqnion AB position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.The idea behind Teqnion AB and Indutrade AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Indutrade vs. Lifco AB | Indutrade vs. Addtech AB | Indutrade vs. NIBE Industrier AB | Indutrade vs. Investment AB Latour |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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