Correlation Between Telefonaktiebolaget and FastPartner
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and FastPartner 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 Telefonaktiebolaget and FastPartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonaktiebolaget LM Ericsson and FastPartner AB, you can compare the effects of market volatilities on Telefonaktiebolaget and FastPartner 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 Telefonaktiebolaget with a short position of FastPartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and FastPartner.
Diversification Opportunities for Telefonaktiebolaget and FastPartner
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonaktiebolaget and FastPartner is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and FastPartner AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FastPartner AB and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson are associated (or correlated) with FastPartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FastPartner AB has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and FastPartner go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and FastPartner
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.78 times more return on investment than FastPartner. However, Telefonaktiebolaget LM Ericsson is 1.28 times less risky than FastPartner. It trades about 0.19 of its potential returns per unit of risk. FastPartner AB is currently generating about 0.0 per unit of risk. If you would invest 6,415 in Telefonaktiebolaget LM Ericsson on September 7, 2024 and sell it today you would earn a total of 2,765 from holding Telefonaktiebolaget LM Ericsson or generate 43.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. FastPartner AB
Performance |
Timeline |
Telefonaktiebolaget |
FastPartner AB |
Telefonaktiebolaget and FastPartner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telefonaktiebolaget and FastPartner
The main advantage of trading using opposite Telefonaktiebolaget and FastPartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, FastPartner 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 FastPartner will offset losses from the drop in FastPartner's long position.Telefonaktiebolaget vs. Telefonaktiebolaget LM Ericsson | Telefonaktiebolaget vs. AB Volvo | Telefonaktiebolaget vs. Investor AB ser | Telefonaktiebolaget vs. Industrivarden AB ser |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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