Correlation Between ZENERGY B and Centrotec

Can any of the company-specific risk be diversified away by investing in both ZENERGY B and Centrotec 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 ZENERGY B and Centrotec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZENERGY B AB and Centrotec SE, you can compare the effects of market volatilities on ZENERGY B and Centrotec 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 ZENERGY B with a short position of Centrotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZENERGY B and Centrotec.

Diversification Opportunities for ZENERGY B and Centrotec

-0.79

Correlation Coefficient

ZENERGY B  Centrotec

Pay attention - limited upside

The 3 months correlation between ZENERGY and Centrotec is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ZENERGY B AB and Centrotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrotec SE and ZENERGY B 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 ZENERGY B AB are associated (or correlated) with Centrotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrotec SE has no effect on the direction of ZENERGY B i.e., ZENERGY B and Centrotec go up and down completely randomly.

Pair Corralation between ZENERGY B and Centrotec

Assuming the 90 days horizon ZENERGY B AB is expected to under-perform the Centrotec. In addition to that, ZENERGY B is 4.16 times more volatile than Centrotec SE. It trades about -0.13 of its total potential returns per unit of risk. Centrotec SE is currently generating about 0.09 per unit of volatility. If you would invest  4,960  in Centrotec SE on September 22, 2024 and sell it today you would earn a total of  340.00  from holding Centrotec SE or generate 6.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ZENERGY B AB  vs.  Centrotec SE

ZENERGY B AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZENERGY B AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Centrotec SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Centrotec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ZENERGY B and Centrotec

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

The idea behind ZENERGY B AB and Centrotec SE 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.