Correlation Between XXL ASA and Arcticzymes Technologies
Can any of the company-specific risk be diversified away by investing in both XXL ASA and Arcticzymes Technologies 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 XXL ASA and Arcticzymes Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL ASA and Arcticzymes Technologies ASA, you can compare the effects of market volatilities on XXL ASA and Arcticzymes Technologies 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 XXL ASA with a short position of Arcticzymes Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL ASA and Arcticzymes Technologies.
Diversification Opportunities for XXL ASA and Arcticzymes Technologies
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XXL and Arcticzymes is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding XXL ASA and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies and XXL ASA 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 XXL ASA are associated (or correlated) with Arcticzymes Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcticzymes Technologies has no effect on the direction of XXL ASA i.e., XXL ASA and Arcticzymes Technologies go up and down completely randomly.
Pair Corralation between XXL ASA and Arcticzymes Technologies
Assuming the 90 days trading horizon XXL ASA is expected to under-perform the Arcticzymes Technologies. In addition to that, XXL ASA is 2.99 times more volatile than Arcticzymes Technologies ASA. It trades about -0.15 of its total potential returns per unit of risk. Arcticzymes Technologies ASA is currently generating about 0.0 per unit of volatility. If you would invest 1,422 in Arcticzymes Technologies ASA on November 9, 2024 and sell it today you would lose (8.00) from holding Arcticzymes Technologies ASA or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XXL ASA vs. Arcticzymes Technologies ASA
Performance |
| Timeline |
| XXL ASA |
| Arcticzymes Technologies |
XXL ASA and Arcticzymes Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL ASA and Arcticzymes Technologies
The main advantage of trading using opposite XXL ASA and Arcticzymes Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL ASA position performs unexpectedly, Arcticzymes Technologies 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 Arcticzymes Technologies will offset losses from the drop in Arcticzymes Technologies' long position.The idea behind XXL ASA and Arcticzymes Technologies 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.| Arcticzymes Technologies vs. Bergenbio ASA | Arcticzymes Technologies vs. Photocure | Arcticzymes Technologies vs. Kitron ASA | Arcticzymes Technologies vs. Vow ASA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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