Correlation Between Centrotec and ZENERGY B

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

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

Diversification Opportunities for Centrotec and ZENERGY B

0.0

Correlation Coefficient

Centrotec  ZENERGY B

Pay attention - limited upside

The 3 months correlation between Centrotec and ZENERGY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Centrotec SE and ZENERGY B AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENERGY B AB and Centrotec 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 Centrotec SE are associated (or correlated) with ZENERGY B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENERGY B AB has no effect on the direction of Centrotec i.e., Centrotec and ZENERGY B go up and down completely randomly.

Pair Corralation between Centrotec and ZENERGY B

If you would invest  5,250  in Centrotec SE on December 5, 2024 and sell it today you would earn a total of  1,650  from holding Centrotec SE or generate 31.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Centrotec SE  vs.  ZENERGY B AB

Centrotec SE

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Centrotec displayed solid returns over the last few months and may actually be approaching a breakup point.

ZENERGY B AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZENERGY B AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ZENERGY B is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Centrotec and ZENERGY B

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

The idea behind Centrotec SE and ZENERGY B 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.