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
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Goodtech and Zalaris is 0.07. 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 generate 0.87 times more return on investment than Zalaris ASA. However, Goodtech is 1.15 times less risky than Zalaris ASA. It trades about 0.41 of its potential returns per unit of risk. Zalaris ASA is currently generating about 0.28 per unit of risk. If you would invest 900.00 in Goodtech on September 25, 2024 and sell it today you would earn a total of 130.00 from holding Goodtech or generate 14.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
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. DnB ASA | Goodtech vs. Orkla ASA | Goodtech vs. Storebrand ASA | Goodtech vs. Yara International ASA |
Zalaris ASA vs. DnB ASA | Zalaris ASA vs. Orkla ASA | Zalaris ASA vs. Storebrand ASA | Zalaris ASA vs. Yara International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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