Correlation Between Zealand Pharma and Hansa Biopharma

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

By analyzing existing cross correlation between Zealand Pharma AS and Hansa Biopharma AB, you can compare the effects of market volatilities on Zealand Pharma and Hansa Biopharma 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 Zealand Pharma with a short position of Hansa Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zealand Pharma and Hansa Biopharma.

Diversification Opportunities for Zealand Pharma and Hansa Biopharma

-0.23

Correlation Coefficient

Zealand Pharma  Hansa Biopharma

Very good diversification

The 3 months correlation between Zealand and Hansa is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Zealand Pharma AS and Hansa Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Biopharma AB and Zealand Pharma 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 Zealand Pharma AS are associated (or correlated) with Hansa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Biopharma AB has no effect on the direction of Zealand Pharma i.e., Zealand Pharma and Hansa Biopharma go up and down completely randomly.

Pair Corralation between Zealand Pharma and Hansa Biopharma

Assuming the 90 days trading horizon Zealand Pharma AS is expected to generate 0.55 times more return on investment than Hansa Biopharma. However, Zealand Pharma AS is 1.83 times less risky than Hansa Biopharma. It trades about -0.01 of its potential returns per unit of risk. Hansa Biopharma AB is currently generating about -0.07 per unit of risk. If you would invest  73,000  in Zealand Pharma AS on November 29, 2024 and sell it today you would lose (3,000) from holding Zealand Pharma AS or give up 4.11% of portfolio value over 90 days.

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

Zealand Pharma AS  vs.  Hansa Biopharma AB

Zealand Pharma AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zealand Pharma AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Zealand Pharma is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hansa Biopharma AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hansa Biopharma AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Zealand Pharma and Hansa Biopharma

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

The idea behind Zealand Pharma AS and Hansa Biopharma 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.