Correlation Between Ratos AB and Zwipe AS

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

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

Diversification Opportunities for Ratos AB and Zwipe AS

0.71

Correlation Coefficient

Ratos AB  Zwipe AS

Poor diversification

The 3 months correlation between Ratos and Zwipe is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ratos AB and Zwipe AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zwipe AS and Ratos AB 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 Ratos AB are associated (or correlated) with Zwipe AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zwipe AS has no effect on the direction of Ratos AB i.e., Ratos AB and Zwipe AS go up and down completely randomly.

Pair Corralation between Ratos AB and Zwipe AS

Assuming the 90 days trading horizon Ratos AB is expected to generate 0.07 times more return on investment than Zwipe AS. However, Ratos AB is 13.97 times less risky than Zwipe AS. It trades about -0.04 of its potential returns per unit of risk. Zwipe AS is currently generating about -0.03 per unit of risk. If you would invest  3,254  in Ratos AB on September 14, 2024 and sell it today you would lose (46.00) from holding Ratos AB or give up 1.41% of portfolio value over 90 days.

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

Ratos AB  vs.  Zwipe AS

Ratos AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratos AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Zwipe AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zwipe AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ratos AB and Zwipe AS

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

The idea behind Ratos AB and Zwipe AS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.