Correlation Between Arcticzymes Technologies and Eqva ASA

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

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

Diversification Opportunities for Arcticzymes Technologies and Eqva ASA

0.6

Correlation Coefficient

Arcticzymes Technologies  Eqva ASA

Poor diversification

The 3 months correlation between Arcticzymes and Eqva is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arcticzymes Technologies ASA and Eqva ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eqva ASA and Arcticzymes Technologies 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 Arcticzymes Technologies ASA are associated (or correlated) with Eqva ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eqva ASA has no effect on the direction of Arcticzymes Technologies i.e., Arcticzymes Technologies and Eqva ASA go up and down completely randomly.

Pair Corralation between Arcticzymes Technologies and Eqva ASA

Assuming the 90 days trading horizon Arcticzymes Technologies ASA is expected to generate 1.5 times more return on investment than Eqva ASA. However, Arcticzymes Technologies is 1.5 times more volatile than Eqva ASA. It trades about 0.17 of its potential returns per unit of risk. Eqva ASA is currently generating about 0.07 per unit of risk. If you would invest  1,274  in Arcticzymes Technologies ASA on November 29, 2024 and sell it today you would earn a total of  548.00  from holding Arcticzymes Technologies ASA or generate 43.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Arcticzymes Technologies ASA  vs.  Eqva ASA

Arcticzymes Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arcticzymes Technologies ASA are ranked lower than 13 (%) 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.

Eqva ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eqva ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Eqva ASA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Arcticzymes Technologies and Eqva ASA

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

The idea behind Arcticzymes Technologies ASA and Eqva 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.