Correlation Between Telia Company and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Telia Company and Tele2 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 Telia Company and Tele2 AB 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 Tele2 AB, you can compare the effects of market volatilities on Telia Company and Tele2 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 Telia Company with a short position of Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and Tele2 AB.
Diversification Opportunities for Telia Company and Tele2 AB
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telia and Tele2 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 AB 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 Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of Telia Company i.e., Telia Company and Tele2 AB go up and down completely randomly.
Pair Corralation between Telia Company and Tele2 AB
Assuming the 90 days horizon Telia Company AB is expected to under-perform the Tele2 AB. In addition to that, Telia Company is 1.03 times more volatile than Tele2 AB. It trades about -0.32 of its total potential returns per unit of risk. Tele2 AB is currently generating about 0.04 per unit of volatility. If you would invest 376.00 in Tele2 AB on October 23, 2024 and sell it today you would earn a total of 122.00 from holding Tele2 AB or generate 32.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 1.63% |
| Values | Daily Returns |
Telia Company AB vs. Tele2 AB
Performance |
| Timeline |
| Telia Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tele2 AB |
Telia Company and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telia Company and Tele2 AB
The main advantage of trading using opposite Telia Company and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company position performs unexpectedly, Tele2 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| Telia Company vs. MTN Group Ltd | Telia Company vs. Vodacom Group Ltd | Telia Company vs. Telenor ASA ADR | Telia Company vs. WideOpenWest |
| Tele2 AB vs. Proximus NV ADR | Tele2 AB vs. Telstra Limited | Tele2 AB vs. Singapore Telecommunications Limited | Tele2 AB vs. Vodafone Group PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |