Correlation Between Zaptec AS and Eolus Vind

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

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

Diversification Opportunities for Zaptec AS and Eolus Vind

0.66

Correlation Coefficient

Zaptec AS  Eolus Vind

Poor diversification

The 3 months correlation between Zaptec and Eolus is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Eolus Vind AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eolus Vind 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 Eolus Vind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eolus Vind AB has no effect on the direction of Zaptec AS i.e., Zaptec AS and Eolus Vind go up and down completely randomly.

Pair Corralation between Zaptec AS and Eolus Vind

Assuming the 90 days trading horizon Zaptec AS is expected to generate 1.58 times more return on investment than Eolus Vind. However, Zaptec AS is 1.58 times more volatile than Eolus Vind AB. It trades about 0.25 of its potential returns per unit of risk. Eolus Vind AB is currently generating about 0.14 per unit of risk. If you would invest  961.00  in Zaptec AS on November 29, 2024 and sell it today you would earn a total of  939.00  from holding Zaptec AS or generate 97.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Zaptec AS  vs.  Eolus Vind AB

Zaptec AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zaptec AS are ranked lower than 19 (%) 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.

Eolus Vind AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eolus Vind AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Eolus Vind sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zaptec AS and Eolus Vind

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

The idea behind Zaptec AS and Eolus Vind 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.