Correlation Between Telia Company and Cyber Security

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

By analyzing existing cross correlation between Telia Company AB and Cyber Security 1, you can compare the effects of market volatilities on Telia Company and Cyber Security 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 Telia Company with a short position of Cyber Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and Cyber Security.

Diversification Opportunities for Telia Company and Cyber Security

0.61

Correlation Coefficient

Telia Company  Cyber Security

Poor diversification

The 3 months correlation between Telia and Cyber is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and Cyber Security 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Security 1 and Telia Company 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 Telia Company AB are associated (or correlated) with Cyber Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Security 1 has no effect on the direction of Telia Company i.e., Telia Company and Cyber Security go up and down completely randomly.

Pair Corralation between Telia Company and Cyber Security

Assuming the 90 days trading horizon Telia Company AB is expected to under-perform the Cyber Security. But the stock apears to be less risky and, when comparing its historical volatility, Telia Company AB is 13.72 times less risky than Cyber Security. The stock trades about -0.3 of its potential returns per unit of risk. The Cyber Security 1 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Cyber Security 1 on October 3, 2024 and sell it today you would lose (0.06) from holding Cyber Security 1 or give up 6.0% of portfolio value over 90 days.

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

Telia Company AB  vs.  Cyber Security 1

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.

Cyber Security 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyber Security 1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Telia Company and Cyber Security

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

The idea behind Telia Company AB and Cyber Security 1 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.