Correlation Between Zaptec AS and Diamyd Medical

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

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

Diversification Opportunities for Zaptec AS and Diamyd Medical

0.03

Correlation Coefficient

Zaptec AS  Diamyd Medical

Significant diversification

The 3 months correlation between Zaptec and Diamyd is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB 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 Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of Zaptec AS i.e., Zaptec AS and Diamyd Medical go up and down completely randomly.

Pair Corralation between Zaptec AS and Diamyd Medical

Assuming the 90 days trading horizon Zaptec AS is expected to under-perform the Diamyd Medical. But the stock apears to be less risky and, when comparing its historical volatility, Zaptec AS is 1.38 times less risky than Diamyd Medical. The stock trades about -0.03 of its potential returns per unit of risk. The Diamyd Medical AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,395  in Diamyd Medical AB on September 15, 2024 and sell it today you would earn a total of  197.00  from holding Diamyd Medical AB or generate 14.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Zaptec AS  vs.  Diamyd Medical AB

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 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.

Diamyd Medical AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamyd Medical AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Diamyd Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zaptec AS and Diamyd Medical

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

The idea behind Zaptec AS and Diamyd Medical AB 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.