Correlation Between Zealand Pharma and UIE PLC
Can any of the company-specific risk be diversified away by investing in both Zealand Pharma and UIE PLC 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 UIE PLC 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 UIE PLC, you can compare the effects of market volatilities on Zealand Pharma and UIE PLC 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 UIE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zealand Pharma and UIE PLC.
Diversification Opportunities for Zealand Pharma and UIE PLC
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zealand and UIE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zealand Pharma AS and UIE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UIE PLC 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 UIE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UIE PLC has no effect on the direction of Zealand Pharma i.e., Zealand Pharma and UIE PLC go up and down completely randomly.
Pair Corralation between Zealand Pharma and UIE PLC
Assuming the 90 days trading horizon Zealand Pharma AS is expected to generate 2.27 times more return on investment than UIE PLC. However, Zealand Pharma is 2.27 times more volatile than UIE PLC. It trades about 0.09 of its potential returns per unit of risk. UIE PLC is currently generating about 0.08 per unit of risk. If you would invest 19,870 in Zealand Pharma AS on September 4, 2024 and sell it today you would earn a total of 52,830 from holding Zealand Pharma AS or generate 265.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zealand Pharma AS vs. UIE PLC
Performance |
| Timeline |
| Zealand Pharma AS |
| UIE PLC |
Zealand Pharma and UIE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zealand Pharma and UIE PLC
The main advantage of trading using opposite Zealand Pharma and UIE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zealand Pharma position performs unexpectedly, UIE PLC 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 UIE PLC will offset losses from the drop in UIE PLC's long position.| Zealand Pharma vs. Bavarian Nordic | Zealand Pharma vs. Ambu AS | Zealand Pharma vs. Genmab AS | Zealand Pharma vs. ALK Abell AS |
| UIE PLC vs. Per Aarsleff Holding | UIE PLC vs. Schouw Co | UIE PLC vs. Ringkjoebing Landbobank AS | UIE PLC vs. Jeudan |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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