Correlation Between Exor NV and Zapp Electric

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

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

Diversification Opportunities for Exor NV and Zapp Electric

0.31

Correlation Coefficient

Exor NV  Zapp Electric

Weak diversification

The 3 months correlation between Exor and Zapp is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Exor NV and Zapp Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapp Electric Vehicles and Exor NV 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 Exor NV are associated (or correlated) with Zapp Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapp Electric Vehicles has no effect on the direction of Exor NV i.e., Exor NV and Zapp Electric go up and down completely randomly.

Pair Corralation between Exor NV and Zapp Electric

Assuming the 90 days horizon Exor NV is expected to under-perform the Zapp Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Exor NV is 14.18 times less risky than Zapp Electric. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Zapp Electric Vehicles is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.93  in Zapp Electric Vehicles on December 4, 2024 and sell it today you would lose (1.06) from holding Zapp Electric Vehicles or give up 54.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.47%
Values	Daily Returns

Exor NV  vs.  Zapp Electric Vehicles

Exor NV

Risk-Adjusted Performance

Very Weak

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

Zapp Electric Vehicles

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zapp Electric Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Zapp Electric is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Exor NV and Zapp Electric

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

The idea behind Exor NV and Zapp Electric Vehicles 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.