Correlation Between Impax Environmental and Arcticzymes Technologies

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

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

Diversification Opportunities for Impax Environmental and Arcticzymes Technologies

0.69

Correlation Coefficient

Impax Environmental  Arcticzymes Technologies

Poor diversification

The 3 months correlation between Impax and Arcticzymes is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies and Impax Environmental 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 Impax Environmental Markets 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 Impax Environmental i.e., Impax Environmental and Arcticzymes Technologies go up and down completely randomly.

Pair Corralation between Impax Environmental and Arcticzymes Technologies

Assuming the 90 days trading horizon Impax Environmental is expected to generate 1.63 times less return on investment than Arcticzymes Technologies. But when comparing it to its historical volatility, Impax Environmental Markets is 1.13 times less risky than Arcticzymes Technologies. It trades about 0.11 of its potential returns per unit of risk. Arcticzymes Technologies ASA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,360  in Arcticzymes Technologies ASA on October 9, 2024 and sell it today you would earn a total of  34.00  from holding Arcticzymes Technologies ASA or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.47%
Values	Daily Returns

Impax Environmental Markets  vs.  Arcticzymes Technologies ASA

Impax Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impax Environmental Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Impax Environmental is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Arcticzymes Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcticzymes Technologies ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Impax Environmental and Arcticzymes Technologies

The main advantage of trading using opposite Impax Environmental and Arcticzymes Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Environmental 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 Impax Environmental Markets 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.