Correlation Between Toleranzia and Essity AB

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

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

Diversification Opportunities for Toleranzia and Essity AB

-0.27

Correlation Coefficient

Toleranzia  Essity AB

Very good diversification

The 3 months correlation between Toleranzia and Essity is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Toleranzia AB and Essity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essity AB and Toleranzia 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 Toleranzia AB are associated (or correlated) with Essity AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essity AB has no effect on the direction of Toleranzia i.e., Toleranzia and Essity AB go up and down completely randomly.

Pair Corralation between Toleranzia and Essity AB

Assuming the 90 days trading horizon Toleranzia AB is expected to generate 1.84 times more return on investment than Essity AB. However, Toleranzia is 1.84 times more volatile than Essity AB. It trades about 0.05 of its potential returns per unit of risk. Essity AB is currently generating about -0.13 per unit of risk. If you would invest  44.00  in Toleranzia AB on April 25, 2025 and sell it today you would earn a total of  2.00  from holding Toleranzia AB or generate 4.55% return on investment over 90 days.

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

Toleranzia AB  vs.  Essity AB

Toleranzia AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toleranzia AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Toleranzia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Essity AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Essity AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Toleranzia and Essity AB

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

The idea behind Toleranzia AB and Essity 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.