Correlation Between NOTE AB and Zaptec AS

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

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

Diversification Opportunities for NOTE AB and Zaptec AS

0.63

Correlation Coefficient

NOTE AB  Zaptec AS

Poor diversification

The 3 months correlation between NOTE and Zaptec is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NOTE AB and Zaptec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaptec AS and NOTE AB 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 NOTE AB 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 NOTE AB i.e., NOTE AB and Zaptec AS go up and down completely randomly.

Pair Corralation between NOTE AB and Zaptec AS

Assuming the 90 days trading horizon NOTE AB is expected to generate 3.23 times less return on investment than Zaptec AS. But when comparing it to its historical volatility, NOTE AB is 2.97 times less risky than Zaptec AS. It trades about 0.15 of its potential returns per unit of risk. Zaptec AS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,093  in Zaptec AS on December 30, 2024 and sell it today you would earn a total of  638.00  from holding Zaptec AS or generate 58.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

NOTE AB  vs.  Zaptec AS

NOTE AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOTE AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NOTE AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zaptec AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zaptec AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Zaptec AS disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NOTE AB and Zaptec AS

The main advantage of trading using opposite NOTE AB and Zaptec AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOTE AB 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 NOTE AB 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.