Correlation Between Zaptec AS and Axactor SE

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

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

Diversification Opportunities for Zaptec AS and Axactor SE

0.62

Correlation Coefficient

Zaptec AS  Axactor SE

Poor diversification

The 3 months correlation between Zaptec and Axactor is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE and Zaptec AS 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 Zaptec AS are associated (or correlated) with Axactor SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axactor SE has no effect on the direction of Zaptec AS i.e., Zaptec AS and Axactor SE go up and down completely randomly.

Pair Corralation between Zaptec AS and Axactor SE

Assuming the 90 days trading horizon Zaptec AS is expected to under-perform the Axactor SE. In addition to that, Zaptec AS is 1.55 times more volatile than Axactor SE. It trades about -0.12 of its total potential returns per unit of risk. Axactor SE is currently generating about -0.16 per unit of volatility. If you would invest  450.00  in Axactor SE on September 2, 2024 and sell it today you would lose (105.00) from holding Axactor SE or give up 23.33% of portfolio value over 90 days.

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

Zaptec AS  vs.  Axactor SE

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 weak 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.

Axactor SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axactor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Zaptec AS and Axactor SE

The main advantage of trading using opposite Zaptec AS and Axactor SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zaptec AS position performs unexpectedly, Axactor SE 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 Axactor SE will offset losses from the drop in Axactor SE's long position.

The idea behind Zaptec AS and Axactor SE 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.