Correlation Between Fortum Oyj and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Telefonaktiebolaget 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 Fortum Oyj and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Fortum Oyj and Telefonaktiebolaget 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 Fortum Oyj with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Telefonaktiebolaget.
Diversification Opportunities for Fortum Oyj and Telefonaktiebolaget
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortum and Telefonaktiebolaget is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and Fortum Oyj 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 Fortum Oyj are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Fortum Oyj and Telefonaktiebolaget
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 0.99 times more return on investment than Telefonaktiebolaget. However, Fortum Oyj is 1.02 times less risky than Telefonaktiebolaget. It trades about 0.26 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.11 per unit of risk. If you would invest 1,100 in Fortum Oyj on February 28, 2024 and sell it today you would earn a total of 316.00 from holding Fortum Oyj or generate 28.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fortum Oyj vs. Telefonaktiebolaget LM Ericsso
Performance |
Timeline |
Fortum Oyj |
Telefonaktiebolaget |
Fortum Oyj and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fortum Oyj and Telefonaktiebolaget
The main advantage of trading using opposite Fortum Oyj and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.Fortum Oyj vs. Qt Group Oyj | Fortum Oyj vs. Neste Oil Oyj | Fortum Oyj vs. Elisa Oyj | Fortum Oyj vs. Sampo Oyj A |
Telefonaktiebolaget vs. Telia Company AB | Telefonaktiebolaget vs. SSAB AB ser | Telefonaktiebolaget vs. Kesko Oyj | Telefonaktiebolaget vs. Stora Enso Oyj |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Transaction History View history of all your transactions and understand their impact on performance | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |