Correlation Between Arcticzymes Technologies and Napatech

Can any of the company-specific risk be diversified away by investing in both Arcticzymes Technologies and Napatech 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 Napatech 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 Napatech AS, you can compare the effects of market volatilities on Arcticzymes Technologies and Napatech 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 Napatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcticzymes Technologies and Napatech.

Diversification Opportunities for Arcticzymes Technologies and Napatech

-0.2

Correlation Coefficient

Arcticzymes Technologies  Napatech

Good diversification

The 3 months correlation between Arcticzymes and Napatech is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Arcticzymes Technologies ASA and Napatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Napatech AS 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 Napatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Napatech AS has no effect on the direction of Arcticzymes Technologies i.e., Arcticzymes Technologies and Napatech go up and down completely randomly.

Pair Corralation between Arcticzymes Technologies and Napatech

Assuming the 90 days trading horizon Arcticzymes Technologies ASA is expected to generate 1.19 times more return on investment than Napatech. However, Arcticzymes Technologies is 1.19 times more volatile than Napatech AS. It trades about 0.16 of its potential returns per unit of risk. Napatech AS is currently generating about -0.17 per unit of risk. If you would invest  1,392  in Arcticzymes Technologies ASA on December 2, 2024 and sell it today you would earn a total of  444.00  from holding Arcticzymes Technologies ASA or generate 31.9% return on investment over 90 days.

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

Arcticzymes Technologies ASA  vs.  Napatech AS

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 12 (%) 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.

Napatech AS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Arcticzymes Technologies and Napatech

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

The idea behind Arcticzymes Technologies ASA and Napatech AS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.