Correlation Between Integrated Wind and Zaptec AS

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Can any of the company-specific risk be diversified away by investing in both Integrated Wind 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 Integrated Wind and Zaptec AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integrated Wind Solutions and Zaptec AS, you can compare the effects of market volatilities on Integrated Wind 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 Integrated Wind with a short position of Zaptec AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Wind and Zaptec AS.

Diversification Opportunities for Integrated Wind and Zaptec AS

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Integrated and Zaptec is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and Zaptec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaptec AS and Integrated Wind 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 Integrated Wind Solutions 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 Integrated Wind i.e., Integrated Wind and Zaptec AS go up and down completely randomly.

Pair Corralation between Integrated Wind and Zaptec AS

Assuming the 90 days trading horizon Integrated Wind Solutions is expected to under-perform the Zaptec AS. But the stock apears to be less risky and, when comparing its historical volatility, Integrated Wind Solutions is 1.89 times less risky than Zaptec AS. The stock trades about -0.07 of its potential returns per unit of risk. The Zaptec AS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,078  in Zaptec AS on September 24, 2024 and sell it today you would lose (106.00) from holding Zaptec AS or give up 9.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Integrated Wind Solutions  vs.  Zaptec AS

 Performance 
       Timeline  
Integrated Wind Solutions 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Integrated Wind Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Zaptec AS 

Risk-Adjusted Performance

0 of 100

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

Integrated Wind and Zaptec AS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Integrated Wind and Zaptec AS

The main advantage of trading using opposite Integrated Wind and Zaptec AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Wind 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 Integrated Wind Solutions 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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