Correlation Between Zaptec AS and Starbreeze

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

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

Diversification Opportunities for Zaptec AS and Starbreeze

0.76

Correlation Coefficient

Zaptec AS  Starbreeze

Poor diversification

The 3 months correlation between Zaptec and Starbreeze is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Starbreeze AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbreeze 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 Starbreeze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbreeze AB has no effect on the direction of Zaptec AS i.e., Zaptec AS and Starbreeze go up and down completely randomly.

Pair Corralation between Zaptec AS and Starbreeze

Assuming the 90 days trading horizon Zaptec AS is expected to generate 0.3 times more return on investment than Starbreeze. However, Zaptec AS is 3.3 times less risky than Starbreeze. It trades about 0.03 of its potential returns per unit of risk. Starbreeze AB is currently generating about -0.11 per unit of risk. If you would invest  964.00  in Zaptec AS on September 24, 2024 and sell it today you would earn a total of  8.00  from holding Zaptec AS or generate 0.83% return on investment over 90 days.

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

Zaptec AS  vs.  Starbreeze 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 quite persistent basic indicators, Zaptec AS is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Starbreeze AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbreeze AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zaptec AS and Starbreeze

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

The idea behind Zaptec AS and Starbreeze 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.