Correlation Between Wise Group and Teqnion AB
Can any of the company-specific risk be diversified away by investing in both Wise Group and Teqnion 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 Wise Group and Teqnion AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wise Group AB and Teqnion AB, you can compare the effects of market volatilities on Wise Group and Teqnion 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 Wise Group with a short position of Teqnion AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wise Group and Teqnion AB.
Diversification Opportunities for Wise Group and Teqnion AB
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wise and Teqnion is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wise Group AB and Teqnion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teqnion AB and Wise Group 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 Wise Group AB are associated (or correlated) with Teqnion AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teqnion AB has no effect on the direction of Wise Group i.e., Wise Group and Teqnion AB go up and down completely randomly.
Pair Corralation between Wise Group and Teqnion AB
Assuming the 90 days trading horizon Wise Group AB is expected to generate 2.9 times more return on investment than Teqnion AB. However, Wise Group is 2.9 times more volatile than Teqnion AB. It trades about -0.13 of its potential returns per unit of risk. Teqnion AB is currently generating about -0.57 per unit of risk. If you would invest 1,825 in Wise Group AB on September 1, 2024 and sell it today you would lose (185.00) from holding Wise Group AB or give up 10.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wise Group AB vs. Teqnion AB
Performance |
| Timeline |
| Wise Group AB |
| Teqnion AB |
Wise Group and Teqnion AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wise Group and Teqnion AB
The main advantage of trading using opposite Wise Group and Teqnion AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wise Group position performs unexpectedly, Teqnion 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 Teqnion AB will offset losses from the drop in Teqnion AB's long position.| Wise Group vs. Rottneros AB | Wise Group vs. Dedicare AB | Wise Group vs. XANO Industri AB | Wise Group vs. Svedbergs i Dalstorp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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