Correlation Between Zealand Pharma and Trifork Holding

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

Diversification Opportunities for Zealand Pharma and Trifork Holding

-0.65

Correlation Coefficient

Zealand Pharma  Trifork Holding

Excellent diversification

The 3 months correlation between Zealand and Trifork is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zealand Pharma AS and Trifork Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trifork Holding AG 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 Trifork Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trifork Holding AG has no effect on the direction of Zealand Pharma i.e., Zealand Pharma and Trifork Holding go up and down completely randomly.

Pair Corralation between Zealand Pharma and Trifork Holding

Assuming the 90 days trading horizon Zealand Pharma AS is expected to under-perform the Trifork Holding. In addition to that, Zealand Pharma is 2.67 times more volatile than Trifork Holding AG. It trades about -0.05 of its total potential returns per unit of risk. Trifork Holding AG is currently generating about 0.12 per unit of volatility. If you would invest  7,450  in Trifork Holding AG on December 29, 2024 and sell it today you would earn a total of  1,250  from holding Trifork Holding AG or generate 16.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Zealand Pharma AS  vs.  Trifork Holding AG

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Trifork Holding AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trifork Holding AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Trifork Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zealand Pharma and Trifork Holding

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

The idea behind Zealand Pharma AS and Trifork Holding AG 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.