Correlation Between 3M and Teliasonera

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Can any of the company-specific risk be diversified away by investing in both 3M and Teliasonera 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 3M and Teliasonera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Teliasonera Ab Ord, you can compare the effects of market volatilities on 3M and Teliasonera 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 3M with a short position of Teliasonera. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Teliasonera.

Diversification Opportunities for 3M and Teliasonera

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between 3M and Teliasonera is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Teliasonera Ab Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teliasonera Ab Ord and 3M 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 3M Company are associated (or correlated) with Teliasonera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teliasonera Ab Ord has no effect on the direction of 3M i.e., 3M and Teliasonera go up and down completely randomly.

Pair Corralation between 3M and Teliasonera

Considering the 90-day investment horizon 3M is expected to generate 1.23 times less return on investment than Teliasonera. But when comparing it to its historical volatility, 3M Company is 1.07 times less risky than Teliasonera. It trades about 0.19 of its potential returns per unit of risk. Teliasonera Ab Ord is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  255.00  in Teliasonera Ab Ord on August 28, 2022 and sell it today you would earn a total of  20.00  from holding Teliasonera Ab Ord or generate 7.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

3M Company  vs.  Teliasonera Ab Ord

 Performance (%) 
       Timeline  
3M Company 
3M Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady primary indicators, 3M is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

3M Price Channel

Teliasonera Ab Ord 
Teliasonera Performance
0 of 100
Over the last 90 days Teliasonera Ab Ord 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 rather sound which may send shares a bit higher in December 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Teliasonera Price Channel

3M and Teliasonera Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 3M and Teliasonera

The main advantage of trading using opposite 3M and Teliasonera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Teliasonera 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 Teliasonera will offset losses from the drop in Teliasonera's long position.
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The idea behind 3M Company and Teliasonera Ab Ord 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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