Correlation Between Vef AB and L E
Can any of the company-specific risk be diversified away by investing in both Vef AB and L E 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 Vef AB and L E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vef AB and L E Lundbergfretagen, you can compare the effects of market volatilities on Vef AB and L E 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 Vef AB with a short position of L E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vef AB and L E.
Diversification Opportunities for Vef AB and L E
Very weak diversification
The 3 months correlation between Vef and LUND-B is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vef AB and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen and Vef 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 Vef AB are associated (or correlated) with L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of Vef AB i.e., Vef AB and L E go up and down completely randomly.
Pair Corralation between Vef AB and L E
Assuming the 90 days trading horizon Vef AB is expected to generate 3.89 times less return on investment than L E. In addition to that, Vef AB is 2.29 times more volatile than L E Lundbergfretagen. It trades about 0.0 of its total potential returns per unit of risk. L E Lundbergfretagen is currently generating about 0.04 per unit of volatility. If you would invest 43,674 in L E Lundbergfretagen on September 12, 2024 and sell it today you would earn a total of 9,176 from holding L E Lundbergfretagen or generate 21.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vef AB vs. L E Lundbergfretagen
Performance |
| Timeline |
| Vef AB |
| L E Lundbergfretagen |
Vef AB and L E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vef AB and L E
The main advantage of trading using opposite Vef AB and L E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vef AB position performs unexpectedly, L E 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 L E will offset losses from the drop in L E's long position.The idea behind Vef AB and L E Lundbergfretagen 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.| L E vs. Investment AB Latour | L E vs. Industrivarden AB ser | L E vs. Kinnevik Investment AB | L E vs. Investor AB ser |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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