Correlation Between Essity AB and Lifeclean International
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By analyzing existing cross correlation between Essity AB and Lifeclean International AB, you can compare the effects of market volatilities on Essity AB and Lifeclean International 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 Essity AB with a short position of Lifeclean International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essity AB and Lifeclean International.
Diversification Opportunities for Essity AB and Lifeclean International
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Essity and Lifeclean is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Essity AB and Lifeclean International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeclean International and Essity 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 Essity AB are associated (or correlated) with Lifeclean International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeclean International has no effect on the direction of Essity AB i.e., Essity AB and Lifeclean International go up and down completely randomly.
Pair Corralation between Essity AB and Lifeclean International
Assuming the 90 days trading horizon Essity AB is expected to generate 0.14 times more return on investment than Lifeclean International. However, Essity AB is 7.04 times less risky than Lifeclean International. It trades about -0.07 of its potential returns per unit of risk. Lifeclean International AB is currently generating about -0.21 per unit of risk. If you would invest 31,980 in Essity AB on September 6, 2024 and sell it today you would lose (1,490) from holding Essity AB or give up 4.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Essity AB vs. Lifeclean International AB
Performance |
Timeline |
Essity AB |
Lifeclean International |
Essity AB and Lifeclean International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Essity AB and Lifeclean International
The main advantage of trading using opposite Essity AB and Lifeclean International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essity AB position performs unexpectedly, Lifeclean International 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 Lifeclean International will offset losses from the drop in Lifeclean International's long position.Essity AB vs. Svenska Cellulosa Aktiebolaget | Essity AB vs. ASSA ABLOY AB | Essity AB vs. AB Electrolux | Essity AB vs. AB SKF |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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