Correlation Between Tele2 AB and Resurs Holding

Can any of the company-specific risk be diversified away by investing in both Tele2 AB and Resurs Holding 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 Tele2 AB and Resurs Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tele2 AB and Resurs Holding AB, you can compare the effects of market volatilities on Tele2 AB and Resurs Holding 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 Tele2 AB with a short position of Resurs Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and Resurs Holding.

Diversification Opportunities for Tele2 AB and Resurs Holding

0.5

Correlation Coefficient

Tele2 AB  Resurs Holding

Very weak diversification

The 3 months correlation between Tele2 and Resurs is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and Resurs Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resurs Holding AB and Tele2 AB 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 Tele2 AB are associated (or correlated) with Resurs Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resurs Holding AB has no effect on the direction of Tele2 AB i.e., Tele2 AB and Resurs Holding go up and down completely randomly.

Pair Corralation between Tele2 AB and Resurs Holding

Assuming the 90 days trading horizon Tele2 AB is expected to generate 7.7 times more return on investment than Resurs Holding. However, Tele2 AB is 7.7 times more volatile than Resurs Holding AB. It trades about 0.13 of its potential returns per unit of risk. Resurs Holding AB is currently generating about 0.02 per unit of risk. If you would invest  11,590  in Tele2 AB on December 2, 2024 and sell it today you would earn a total of  1,170  from holding Tele2 AB or generate 10.09% return on investment over 90 days.

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

Tele2 AB  vs.  Resurs Holding AB

Tele2 AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tele2 AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Tele2 AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Resurs Holding AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Resurs Holding AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Resurs Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tele2 AB and Resurs Holding

The main advantage of trading using opposite Tele2 AB and Resurs Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, Resurs Holding 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 Resurs Holding will offset losses from the drop in Resurs Holding's long position.

The idea behind Tele2 AB and Resurs Holding 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.