Correlation Between Stille AB and Zinzino AB

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

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

Diversification Opportunities for Stille AB and Zinzino AB

-0.21

Correlation Coefficient

Stille AB  Zinzino AB

Very good diversification

The 3 months correlation between Stille and Zinzino is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Stille AB and Zinzino AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinzino AB Series and Stille 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 Stille AB are associated (or correlated) with Zinzino AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinzino AB Series has no effect on the direction of Stille AB i.e., Stille AB and Zinzino AB go up and down completely randomly.

Pair Corralation between Stille AB and Zinzino AB

Assuming the 90 days trading horizon Stille AB is expected to under-perform the Zinzino AB. But the stock apears to be less risky and, when comparing its historical volatility, Stille AB is 1.17 times less risky than Zinzino AB. The stock trades about -0.01 of its potential returns per unit of risk. The Zinzino AB Series is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,160  in Zinzino AB Series on September 12, 2024 and sell it today you would earn a total of  410.00  from holding Zinzino AB Series or generate 5.02% return on investment over 90 days.

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

Stille AB  vs.  Zinzino AB Series

Stille AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stille AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Stille AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Zinzino AB Series

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zinzino AB Series are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zinzino AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stille AB and Zinzino AB

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

The idea behind Stille AB and Zinzino AB Series 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.