Correlation Between Zwipe AS and Ratos AB

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

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

Diversification Opportunities for Zwipe AS and Ratos AB

0.71

Correlation Coefficient

Zwipe AS  Ratos AB

Poor diversification

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

Pair Corralation between Zwipe AS and Ratos AB

Assuming the 90 days trading horizon Zwipe AS is expected to under-perform the Ratos AB. In addition to that, Zwipe AS is 11.01 times more volatile than Ratos AB. It trades about -0.04 of its total potential returns per unit of risk. Ratos AB is currently generating about -0.07 per unit of volatility. If you would invest  3,442  in Ratos AB on September 14, 2024 and sell it today you would lose (234.00) from holding Ratos AB or give up 6.8% of portfolio value over 90 days.

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

Zwipe AS  vs.  Ratos AB

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.

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.

Pair Trading with Zwipe AS and Ratos AB

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

The idea behind Zwipe AS and Ratos 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..