Correlation Between Zaptec AS and Eqva ASA

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

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

Diversification Opportunities for Zaptec AS and Eqva ASA

0.44

Correlation Coefficient

Zaptec AS  Eqva ASA

Very weak diversification

The 3 months correlation between Zaptec and Eqva is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Eqva ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eqva ASA 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 Eqva ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eqva ASA has no effect on the direction of Zaptec AS i.e., Zaptec AS and Eqva ASA go up and down completely randomly.

Pair Corralation between Zaptec AS and Eqva ASA

Assuming the 90 days trading horizon Zaptec AS is expected to under-perform the Eqva ASA. But the stock apears to be less risky and, when comparing its historical volatility, Zaptec AS is 1.02 times less risky than Eqva ASA. The stock trades about -0.12 of its potential returns per unit of risk. The Eqva ASA is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  616.00  in Eqva ASA on August 31, 2024 and sell it today you would lose (151.00) from holding Eqva ASA or give up 24.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Zaptec AS  vs.  Eqva ASA

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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eqva ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eqva ASA 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 essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Zaptec AS and Eqva ASA

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

The idea behind Zaptec AS and Eqva ASA 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.