Correlation Between 5Th Planet and Arcticzymes Technologies

Can any of the company-specific risk be diversified away by investing in both 5Th Planet and Arcticzymes Technologies 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 5Th Planet and Arcticzymes Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5Th Planet Games and Arcticzymes Technologies ASA, you can compare the effects of market volatilities on 5Th Planet and Arcticzymes Technologies 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 5Th Planet with a short position of Arcticzymes Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5Th Planet and Arcticzymes Technologies.

Diversification Opportunities for 5Th Planet and Arcticzymes Technologies

-0.65

Correlation Coefficient

5Th Planet  Arcticzymes Technologies

Excellent diversification

The 3 months correlation between 5Th and Arcticzymes is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding 5Th Planet Games and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies and 5Th Planet 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 5Th Planet Games are associated (or correlated) with Arcticzymes Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcticzymes Technologies has no effect on the direction of 5Th Planet i.e., 5Th Planet and Arcticzymes Technologies go up and down completely randomly.

Pair Corralation between 5Th Planet and Arcticzymes Technologies

Assuming the 90 days trading horizon 5Th Planet Games is expected to under-perform the Arcticzymes Technologies. But the stock apears to be less risky and, when comparing its historical volatility, 5Th Planet Games is 1.08 times less risky than Arcticzymes Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Arcticzymes Technologies ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,334  in Arcticzymes Technologies ASA on December 30, 2024 and sell it today you would earn a total of  298.00  from holding Arcticzymes Technologies ASA or generate 22.34% return on investment over 90 days.

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

5Th Planet Games  vs.  Arcticzymes Technologies ASA

5Th Planet Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days 5Th Planet Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, 5Th Planet is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Arcticzymes Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arcticzymes Technologies ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Arcticzymes Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 5Th Planet and Arcticzymes Technologies

The main advantage of trading using opposite 5Th Planet and Arcticzymes Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5Th Planet position performs unexpectedly, Arcticzymes Technologies 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 Arcticzymes Technologies will offset losses from the drop in Arcticzymes Technologies' long position.

The idea behind 5Th Planet Games and Arcticzymes Technologies ASA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.