Correlation Between Aktia Bank and Telia Company

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

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

Diversification Opportunities for Aktia Bank and Telia Company

0.94

Correlation Coefficient

Aktia Bank  Telia Company

Almost no diversification

The 3 months correlation between Aktia and Telia is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aktia Bank Abp and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company and Aktia Bank 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 Aktia Bank Abp are associated (or correlated) with Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Aktia Bank i.e., Aktia Bank and Telia Company go up and down completely randomly.

Pair Corralation between Aktia Bank and Telia Company

Assuming the 90 days trading horizon Aktia Bank is expected to generate 1.23 times less return on investment than Telia Company. But when comparing it to its historical volatility, Aktia Bank Abp is 1.36 times less risky than Telia Company. It trades about 0.38 of its potential returns per unit of risk. Telia Company AB is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  267.00  in Telia Company AB on December 30, 2024 and sell it today you would earn a total of  67.00  from holding Telia Company AB or generate 25.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Aktia Bank Abp  vs.  Telia Company AB

Aktia Bank Abp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aktia Bank Abp are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Aktia Bank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Telia Company

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Telia Company AB are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Telia Company sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aktia Bank and Telia Company

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

The idea behind Aktia Bank Abp and Telia Company 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.