Correlation Between Intrum Justitia and Telia Company

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

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

Diversification Opportunities for Intrum Justitia and Telia Company

0.7

Correlation Coefficient

Intrum Justitia  Telia Company

Poor diversification

The 3 months correlation between Intrum and Telia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Intrum Justitia AB and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company and Intrum Justitia 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 Intrum Justitia AB 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 Intrum Justitia i.e., Intrum Justitia and Telia Company go up and down completely randomly.

Pair Corralation between Intrum Justitia and Telia Company

Assuming the 90 days trading horizon Intrum Justitia AB is expected to under-perform the Telia Company. In addition to that, Intrum Justitia is 3.33 times more volatile than Telia Company AB. It trades about -0.24 of its total potential returns per unit of risk. Telia Company AB is currently generating about -0.07 per unit of volatility. If you would invest  3,251  in Telia Company AB on September 12, 2024 and sell it today you would lose (171.00) from holding Telia Company AB or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Intrum Justitia AB  vs.  Telia Company AB

Intrum Justitia AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrum Justitia AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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. In spite of comparatively stable basic indicators, Telia Company is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intrum Justitia and Telia Company

The main advantage of trading using opposite Intrum Justitia and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intrum Justitia 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 Intrum Justitia AB 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.