Correlation Between Skue Sparebank and Zalaris ASA

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

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

Diversification Opportunities for Skue Sparebank and Zalaris ASA

0.66

Correlation Coefficient

Skue Sparebank  Zalaris ASA

Poor diversification

The 3 months correlation between Skue and Zalaris is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Zalaris ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalaris ASA and Skue Sparebank 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 Skue Sparebank 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 Skue Sparebank i.e., Skue Sparebank and Zalaris ASA go up and down completely randomly.

Pair Corralation between Skue Sparebank and Zalaris ASA

Assuming the 90 days trading horizon Skue Sparebank is expected to generate 3.13 times less return on investment than Zalaris ASA. But when comparing it to its historical volatility, Skue Sparebank is 1.81 times less risky than Zalaris ASA. It trades about 0.06 of its potential returns per unit of risk. Zalaris ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,705  in Zalaris ASA on September 21, 2024 and sell it today you would earn a total of  4,855  from holding Zalaris ASA or generate 179.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Skue Sparebank  vs.  Zalaris ASA

Skue Sparebank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Skue Sparebank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Skue Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zalaris ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zalaris ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Zalaris ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Skue Sparebank and Zalaris ASA

The main advantage of trading using opposite Skue Sparebank and Zalaris ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank 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.

The idea behind Skue Sparebank and Zalaris ASA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.