Correlation Between L E and Eastnine

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

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

Diversification Opportunities for L E and Eastnine

0.02

Correlation Coefficient

L E  Eastnine

Significant diversification

The 3 months correlation between LUND-B and Eastnine is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding L E Lundbergfretagen and Eastnine AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastnine AB and L E 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 L E Lundbergfretagen are associated (or correlated) with Eastnine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastnine AB has no effect on the direction of L E i.e., L E and Eastnine go up and down completely randomly.

Pair Corralation between L E and Eastnine

Assuming the 90 days trading horizon L E is expected to generate 1.03 times less return on investment than Eastnine. But when comparing it to its historical volatility, L E Lundbergfretagen is 2.07 times less risky than Eastnine. It trades about 0.33 of its potential returns per unit of risk. Eastnine AB is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,550  in Eastnine AB on October 26, 2024 and sell it today you would earn a total of  250.00  from holding Eastnine AB or generate 5.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

L E Lundbergfretagen  vs.  Eastnine AB

L E Lundbergfretagen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eastnine AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eastnine AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eastnine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with L E and Eastnine

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

The idea behind L E Lundbergfretagen and Eastnine 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.