Correlation Between Tele2 AB and AB Electrolux

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Tele2 AB and AB Electrolux 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 Tele2 AB and AB Electrolux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tele2 AB and AB Electrolux, you can compare the effects of market volatilities on Tele2 AB and AB Electrolux 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 Tele2 AB with a short position of AB Electrolux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and AB Electrolux.

Diversification Opportunities for Tele2 AB and AB Electrolux

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Tele2 and ELUX-A is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and AB Electrolux in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Electrolux and Tele2 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 Tele2 AB are associated (or correlated) with AB Electrolux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Electrolux has no effect on the direction of Tele2 AB i.e., Tele2 AB and AB Electrolux go up and down completely randomly.

Pair Corralation between Tele2 AB and AB Electrolux

Assuming the 90 days trading horizon Tele2 AB is expected to generate 4.77 times less return on investment than AB Electrolux. But when comparing it to its historical volatility, Tele2 AB is 2.66 times less risky than AB Electrolux. It trades about 0.09 of its potential returns per unit of risk. AB Electrolux is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10,200  in AB Electrolux on September 17, 2024 and sell it today you would earn a total of  700.00  from holding AB Electrolux or generate 6.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tele2 AB  vs.  AB Electrolux

 Performance 
       Timeline  
Tele2 AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tele2 AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Tele2 AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
AB Electrolux 

Risk-Adjusted Performance

0 of 100

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

Tele2 AB and AB Electrolux Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tele2 AB and AB Electrolux

The main advantage of trading using opposite Tele2 AB and AB Electrolux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, AB Electrolux 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 AB Electrolux will offset losses from the drop in AB Electrolux's long position.
The idea behind Tele2 AB and AB Electrolux 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.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Commodity Directory
Find actively traded commodities issued by global exchanges
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals