Correlation Between Teqnion AB and Momentum Group

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

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

Diversification Opportunities for Teqnion AB and Momentum Group

0.05

Correlation Coefficient

Teqnion AB  Momentum Group

Significant diversification

The 3 months correlation between Teqnion and Momentum is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Teqnion AB and Momentum Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentum Group AB and Teqnion 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 Teqnion AB are associated (or correlated) with Momentum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentum Group AB has no effect on the direction of Teqnion AB i.e., Teqnion AB and Momentum Group go up and down completely randomly.

Pair Corralation between Teqnion AB and Momentum Group

Assuming the 90 days trading horizon Teqnion AB is expected to under-perform the Momentum Group. But the stock apears to be less risky and, when comparing its historical volatility, Teqnion AB is 1.96 times less risky than Momentum Group. The stock trades about -0.18 of its potential returns per unit of risk. The Momentum Group AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  18,000  in Momentum Group AB on September 26, 2024 and sell it today you would lose (560.00) from holding Momentum Group AB or give up 3.11% of portfolio value over 90 days.

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

Teqnion AB  vs.  Momentum Group AB

Teqnion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teqnion AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Momentum Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Momentum Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Momentum Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teqnion AB and Momentum Group

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

The idea behind Teqnion AB and Momentum Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.