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

-0.3

Correlation Coefficient

Starbreeze  Zaptec AS

Very good diversification

The 3 months correlation between Starbreeze and Zaptec is -0.3. 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. But the stock apears to be less risky and, when comparing its historical volatility, Starbreeze AB is 1.43 times less risky than Zaptec AS. The stock trades about -0.05 of its potential returns per unit of risk. The 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 Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Starbreeze AB  vs.  Zaptec AS

Starbreeze AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Starbreeze AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.