Correlation Between Cedar Realty and Telia Company

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

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

Diversification Opportunities for Cedar Realty and Telia Company

0.5

Correlation Coefficient

Cedar Realty  Telia Company

Very weak diversification

The 3 months correlation between Cedar and Telia is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company and Cedar Realty 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 Cedar Realty Trust 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 Cedar Realty i.e., Cedar Realty and Telia Company go up and down completely randomly.

Pair Corralation between Cedar Realty and Telia Company

If you would invest  1,544  in Cedar Realty Trust on September 16, 2024 and sell it today you would earn a total of  126.00  from holding Cedar Realty Trust or generate 8.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	25.58%
Values	Daily Returns

Cedar Realty Trust  vs.  Telia Company AB

Cedar Realty Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.

Telia Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telia Company AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Telia Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cedar Realty and Telia Company

The main advantage of trading using opposite Cedar Realty and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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 Cedar Realty Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.