Correlation Between Starbreeze and Zaptec AS

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

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

Diversification Opportunities for Starbreeze and Zaptec AS

0.76

Correlation Coefficient

Starbreeze  Zaptec AS

Poor diversification

The 3 months correlation between Starbreeze and Zaptec is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Starbreeze AB and Zaptec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaptec AS and Starbreeze 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 Starbreeze 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 Starbreeze i.e., Starbreeze and Zaptec AS go up and down completely randomly.

Pair Corralation between Starbreeze and Zaptec AS

Assuming the 90 days trading horizon Starbreeze AB is expected to under-perform the Zaptec AS. In addition to that, Starbreeze is 3.3 times more volatile than Zaptec AS. It trades about -0.11 of its total potential returns per unit of risk. Zaptec AS is currently generating about 0.03 per unit of volatility. If you would invest  964.00  in Zaptec AS on September 24, 2024 and sell it today you would earn a total of  8.00  from holding Zaptec AS or generate 0.83% return on investment over 90 days.

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

Starbreeze AB  vs.  Zaptec AS

Starbreeze AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbreeze AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 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.

Pair Trading with Starbreeze and Zaptec AS

The main advantage of trading using opposite Starbreeze and Zaptec AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbreeze 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 Starbreeze 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.