Correlation Between TomTom NV and ZENERGY B

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

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

Diversification Opportunities for TomTom NV and ZENERGY B

-0.59

Correlation Coefficient

TomTom NV  ZENERGY B

Excellent diversification

The 3 months correlation between TomTom and ZENERGY is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding TomTom NV and ZENERGY B AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENERGY B AB and TomTom NV 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 TomTom NV are associated (or correlated) with ZENERGY B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENERGY B AB has no effect on the direction of TomTom NV i.e., TomTom NV and ZENERGY B go up and down completely randomly.

Pair Corralation between TomTom NV and ZENERGY B

Assuming the 90 days trading horizon TomTom NV is expected to generate 0.59 times more return on investment than ZENERGY B. However, TomTom NV is 1.69 times less risky than ZENERGY B. It trades about 0.03 of its potential returns per unit of risk. ZENERGY B AB is currently generating about -0.18 per unit of risk. If you would invest  518.00  in TomTom NV on September 22, 2024 and sell it today you would earn a total of  16.00  from holding TomTom NV or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

TomTom NV  vs.  ZENERGY B AB

TomTom NV

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TomTom NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TomTom NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with TomTom NV and ZENERGY B

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

The idea behind TomTom NV and ZENERGY B AB 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.