Correlation Between Tele2 AB and Redsense Medical

Can any of the company-specific risk be diversified away by investing in both Tele2 AB and Redsense Medical 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 Tele2 AB and Redsense Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tele2 AB and Redsense Medical AB, you can compare the effects of market volatilities on Tele2 AB and Redsense Medical 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 Tele2 AB with a short position of Redsense Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and Redsense Medical.

Diversification Opportunities for Tele2 AB and Redsense Medical

0.41

Correlation Coefficient

Tele2 AB  Redsense Medical

Very weak diversification

The 3 months correlation between Tele2 and Redsense is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and Redsense Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redsense Medical and Tele2 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 Tele2 AB are associated (or correlated) with Redsense Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redsense Medical has no effect on the direction of Tele2 AB i.e., Tele2 AB and Redsense Medical go up and down completely randomly.

Pair Corralation between Tele2 AB and Redsense Medical

Assuming the 90 days trading horizon Tele2 AB is expected to generate 0.42 times more return on investment than Redsense Medical. However, Tele2 AB is 2.41 times less risky than Redsense Medical. It trades about 0.16 of its potential returns per unit of risk. Redsense Medical AB is currently generating about 0.03 per unit of risk. If you would invest  13,131  in Tele2 AB on April 20, 2025 and sell it today you would earn a total of  1,719  from holding Tele2 AB or generate 13.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Tele2 AB  vs.  Redsense Medical AB

Tele2 AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tele2 AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Tele2 AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Redsense Medical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Redsense Medical AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Redsense Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tele2 AB and Redsense Medical

The main advantage of trading using opposite Tele2 AB and Redsense Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, Redsense Medical 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 Redsense Medical will offset losses from the drop in Redsense Medical's long position.

The idea behind Tele2 AB and Redsense Medical 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.