Correlation Between Zaptec AS and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Zaptec AS and Lipum AB 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 Lipum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zaptec AS and Lipum AB, you can compare the effects of market volatilities on Zaptec AS and Lipum AB 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 Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zaptec AS and Lipum AB.
Diversification Opportunities for Zaptec AS and Lipum AB
Excellent diversification
The 3 months correlation between Zaptec and Lipum is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Zaptec AS i.e., Zaptec AS and Lipum AB go up and down completely randomly.
Pair Corralation between Zaptec AS and Lipum AB
Assuming the 90 days trading horizon Zaptec AS is expected to under-perform the Lipum AB. In addition to that, Zaptec AS is 1.89 times more volatile than Lipum AB. It trades about -0.1 of its total potential returns per unit of risk. Lipum AB is currently generating about 0.31 per unit of volatility. If you would invest 1,410 in Lipum AB on August 28, 2024 and sell it today you would earn a total of 270.00 from holding Lipum AB or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Zaptec AS vs. Lipum AB
Performance |
| Timeline |
| Zaptec AS |
| Lipum AB |
Zaptec AS and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zaptec AS and Lipum AB
The main advantage of trading using opposite Zaptec AS and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zaptec AS position performs unexpectedly, Lipum AB 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Zaptec AS vs. Kongsberg Automotive Holding | Zaptec AS vs. Bavarian Nordic | Zaptec AS vs. Elkem ASA | Zaptec AS vs. Integrated Wind Solutions |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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