Correlation Between Zaptec AS and Nel ASA

Can any of the company-specific risk be diversified away by investing in both Zaptec AS and Nel 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 Nel 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 Nel ASA, you can compare the effects of market volatilities on Zaptec AS and Nel 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zaptec AS and Nel ASA.

Diversification Opportunities for Zaptec AS and Nel ASA

-0.07

Correlation Coefficient

Zaptec AS  Nel ASA

Good diversification

The 3 months correlation between Zaptec and Nel is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Zaptec AS i.e., Zaptec AS and Nel ASA go up and down completely randomly.

Pair Corralation between Zaptec AS and Nel ASA

Assuming the 90 days trading horizon Zaptec AS is expected to generate 0.63 times more return on investment than Nel ASA. However, Zaptec AS is 1.6 times less risky than Nel ASA. It trades about 0.16 of its potential returns per unit of risk. Nel ASA is currently generating about 0.02 per unit of risk. If you would invest  1,093  in Zaptec AS on December 29, 2024 and sell it today you would earn a total of  638.00  from holding Zaptec AS or generate 58.37% return on investment over 90 days.

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

Zaptec AS  vs.  Nel ASA

Zaptec AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zaptec AS are ranked lower than 12 (%) 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.

Nel ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nel ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Nel ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Zaptec AS and Nel ASA

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

The idea behind Zaptec AS and Nel 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.