Correlation Between I Tech and Zaptec AS

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

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

Diversification Opportunities for I Tech and Zaptec AS

0.04

Correlation Coefficient

I Tech  Zaptec AS

Significant diversification

The 3 months correlation between ITECH and Zaptec is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding I Tech and Zaptec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaptec AS and I Tech 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 I Tech are associated (or correlated) with Zaptec AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zaptec AS has no effect on the direction of I Tech i.e., I Tech and Zaptec AS go up and down completely randomly.

Pair Corralation between I Tech and Zaptec AS

Assuming the 90 days trading horizon I Tech is expected to generate 0.68 times more return on investment than Zaptec AS. However, I Tech is 1.48 times less risky than Zaptec AS. It trades about 0.09 of its potential returns per unit of risk. Zaptec AS is currently generating about -0.06 per unit of risk. If you would invest  4,780  in I Tech on September 12, 2024 and sell it today you would earn a total of  620.00  from holding I Tech or generate 12.97% return on investment over 90 days.

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

I Tech  vs.  Zaptec AS

I Tech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, I Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zaptec AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zaptec AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with I Tech and Zaptec AS

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

The idea behind I Tech and Zaptec 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.