Correlation Between Goodtech and Zalaris ASA
Can any of the company-specific risk be diversified away by investing in both Goodtech and Zalaris 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 Goodtech and Zalaris ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodtech and Zalaris ASA, you can compare the effects of market volatilities on Goodtech and Zalaris 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 Goodtech with a short position of Zalaris ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodtech and Zalaris ASA.
Diversification Opportunities for Goodtech and Zalaris ASA
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Goodtech and Zalaris is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Goodtech and Zalaris ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalaris ASA and Goodtech 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 Goodtech are associated (or correlated) with Zalaris ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zalaris ASA has no effect on the direction of Goodtech i.e., Goodtech and Zalaris ASA go up and down completely randomly.
Pair Corralation between Goodtech and Zalaris ASA
Assuming the 90 days trading horizon Goodtech is expected to under-perform the Zalaris ASA. But the stock apears to be less risky and, when comparing its historical volatility, Goodtech is 1.65 times less risky than Zalaris ASA. The stock trades about -0.25 of its potential returns per unit of risk. The Zalaris ASA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,300 in Zalaris ASA on December 11, 2024 and sell it today you would earn a total of 900.00 from holding Zalaris ASA or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodtech vs. Zalaris ASA
Performance |
| Timeline |
| Goodtech |
| Zalaris ASA |
Goodtech and Zalaris ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodtech and Zalaris ASA
The main advantage of trading using opposite Goodtech and Zalaris ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodtech position performs unexpectedly, Zalaris 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 Zalaris ASA will offset losses from the drop in Zalaris ASA's long position.| Goodtech vs. Eidesvik Offshore ASA | Goodtech vs. Borgestad A | Goodtech vs. Kitron ASA | Goodtech vs. Havila Shipping ASA |
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Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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