Correlation Between TF Bank and L E

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

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

Diversification Opportunities for TF Bank and L E

-0.83

Correlation Coefficient

TF Bank  L E

Pay attention - limited upside

The 3 months correlation between TFBANK and LUND-B is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding TF Bank AB and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen and TF Bank 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 TF Bank AB are associated (or correlated) with L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of TF Bank i.e., TF Bank and L E go up and down completely randomly.

Pair Corralation between TF Bank and L E

Assuming the 90 days trading horizon TF Bank AB is expected to generate 2.14 times more return on investment than L E. However, TF Bank is 2.14 times more volatile than L E Lundbergfretagen. It trades about 0.07 of its potential returns per unit of risk. L E Lundbergfretagen is currently generating about 0.04 per unit of risk. If you would invest  18,760  in TF Bank AB on September 5, 2024 and sell it today you would earn a total of  17,040  from holding TF Bank AB or generate 90.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

TF Bank AB  vs.  L E Lundbergfretagen

TF Bank AB

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with TF Bank and L E

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

The idea behind TF Bank AB and L E Lundbergfretagen 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.