Correlation Between CHEMICAL INDUSTRIES and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both CHEMICAL INDUSTRIES and Telefonaktiebolaget 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 CHEMICAL INDUSTRIES and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEMICAL INDUSTRIES and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on CHEMICAL INDUSTRIES and Telefonaktiebolaget 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 CHEMICAL INDUSTRIES with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEMICAL INDUSTRIES and Telefonaktiebolaget.
Diversification Opportunities for CHEMICAL INDUSTRIES and Telefonaktiebolaget
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHEMICAL and Telefonaktiebolaget is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between CHEMICAL INDUSTRIES and Telefonaktiebolaget
Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 21.43 times less return on investment than Telefonaktiebolaget. But when comparing it to its historical volatility, CHEMICAL INDUSTRIES is 13.87 times less risky than Telefonaktiebolaget. It trades about 0.06 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 186.00 in Telefonaktiebolaget LM Ericsson on November 6, 2024 and sell it today you would earn a total of 517.00 from holding Telefonaktiebolaget LM Ericsson or generate 277.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHEMICAL INDUSTRIES vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| CHEMICAL INDUSTRIES |
| Telefonaktiebolaget |
CHEMICAL INDUSTRIES and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEMICAL INDUSTRIES and Telefonaktiebolaget
The main advantage of trading using opposite CHEMICAL INDUSTRIES and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| CHEMICAL INDUSTRIES vs. SOFI TECHNOLOGIES | CHEMICAL INDUSTRIES vs. VARIOUS EATERIES LS | CHEMICAL INDUSTRIES vs. SCIENCE IN SPORT | CHEMICAL INDUSTRIES vs. Amkor Technology |
| Telefonaktiebolaget vs. COLUMBIA SPORTSWEAR | Telefonaktiebolaget vs. GALENA MINING LTD | Telefonaktiebolaget vs. SCIENCE IN SPORT | Telefonaktiebolaget vs. Perseus Mining Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |