Correlation Between Zaptec AS and Idun Industrier

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

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

Diversification Opportunities for Zaptec AS and Idun Industrier

-0.49

Correlation Coefficient

Zaptec AS  Idun Industrier

Very good diversification

The 3 months correlation between Zaptec and Idun is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Idun Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idun Industrier 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 Idun Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idun Industrier AB has no effect on the direction of Zaptec AS i.e., Zaptec AS and Idun Industrier go up and down completely randomly.

Pair Corralation between Zaptec AS and Idun Industrier

Assuming the 90 days trading horizon Zaptec AS is expected to under-perform the Idun Industrier. In addition to that, Zaptec AS is 1.63 times more volatile than Idun Industrier AB. It trades about -0.09 of its total potential returns per unit of risk. Idun Industrier AB is currently generating about 0.06 per unit of volatility. If you would invest  26,100  in Idun Industrier AB on September 4, 2024 and sell it today you would earn a total of  2,100  from holding Idun Industrier AB or generate 8.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Zaptec AS  vs.  Idun Industrier 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 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.

Idun Industrier AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Idun Industrier AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Idun Industrier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zaptec AS and Idun Industrier

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

The idea behind Zaptec AS and Idun Industrier 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.