Correlation Between Lifco AB and Storytel

Can any of the company-specific risk be diversified away by investing in both Lifco AB and Storytel 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 Lifco AB and Storytel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lifco AB and Storytel AB, you can compare the effects of market volatilities on Lifco AB and Storytel 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 Lifco AB with a short position of Storytel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifco AB and Storytel.

Diversification Opportunities for Lifco AB and Storytel

-0.27

Correlation Coefficient

Lifco AB  Storytel

Very good diversification

The 3 months correlation between Lifco and Storytel is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lifco AB and Storytel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storytel AB and Lifco 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 Lifco AB are associated (or correlated) with Storytel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storytel AB has no effect on the direction of Lifco AB i.e., Lifco AB and Storytel go up and down completely randomly.

Pair Corralation between Lifco AB and Storytel

Assuming the 90 days trading horizon Lifco AB is expected to generate 32.32 times less return on investment than Storytel. But when comparing it to its historical volatility, Lifco AB is 1.72 times less risky than Storytel. It trades about 0.02 of its potential returns per unit of risk. Storytel AB is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  6,080  in Storytel AB on September 28, 2024 and sell it today you would earn a total of  815.00  from holding Storytel AB or generate 13.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Lifco AB  vs.  Storytel AB

Lifco AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifco AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Lifco AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Storytel AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Storytel AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Storytel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifco AB and Storytel

The main advantage of trading using opposite Lifco AB and Storytel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifco AB position performs unexpectedly, Storytel 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 Storytel will offset losses from the drop in Storytel's long position.

The idea behind Lifco AB and Storytel AB 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.

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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.