Correlation Between Telia Company and Resurs Holding

Can any of the company-specific risk be diversified away by investing in both Telia Company 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 Telia Company and Resurs Holding 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 Resurs Holding AB, you can compare the effects of market volatilities on Telia Company 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 Telia Company with a short position of Resurs Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and Resurs Holding.

Diversification Opportunities for Telia Company and Resurs Holding

0.3

Correlation Coefficient

Telia Company  Resurs Holding

Weak diversification

The 3 months correlation between Telia and Resurs is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company 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 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 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 Telia Company i.e., Telia Company and Resurs Holding go up and down completely randomly.

Pair Corralation between Telia Company and Resurs Holding

Assuming the 90 days trading horizon Telia Company AB is expected to generate 2.48 times more return on investment than Resurs Holding. However, Telia Company is 2.48 times more volatile than Resurs Holding AB. It trades about 0.25 of its potential returns per unit of risk. Resurs Holding AB is currently generating about 0.04 per unit of risk. If you would invest  3,073  in Telia Company AB on December 31, 2024 and sell it today you would earn a total of  531.00  from holding Telia Company AB or generate 17.28% return on investment over 90 days.

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

Telia Company AB  vs.  Resurs Holding AB

Telia Company

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telia Company AB are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Telia Company unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 3 (%) 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 Telia Company and Resurs Holding

The main advantage of trading using opposite Telia Company and Resurs Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company 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 Telia Company 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.