Correlation Between Napatech and Arcticzymes Technologies

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

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

Diversification Opportunities for Napatech and Arcticzymes Technologies

0.86

Correlation Coefficient

Napatech  Arcticzymes Technologies

Very poor diversification

The 3 months correlation between Napatech and Arcticzymes is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies and Napatech 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 Napatech AS 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 Napatech i.e., Napatech and Arcticzymes Technologies go up and down completely randomly.

Pair Corralation between Napatech and Arcticzymes Technologies

Assuming the 90 days trading horizon Napatech AS is expected to under-perform the Arcticzymes Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Napatech AS is 1.26 times less risky than Arcticzymes Technologies. The stock trades about -0.18 of its potential returns per unit of risk. The Arcticzymes Technologies ASA is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,720  in Arcticzymes Technologies ASA on September 12, 2024 and sell it today you would lose (370.00) from holding Arcticzymes Technologies ASA or give up 21.51% of portfolio value over 90 days.

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

Napatech AS  vs.  Arcticzymes Technologies ASA

Napatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Napatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential 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.

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. Despite conflicting 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 Napatech and Arcticzymes Technologies

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

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.