Correlation Between Zealand Pharma and United Parcel
Can any of the company-specific risk be diversified away by investing in both Zealand Pharma and United Parcel 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 Zealand Pharma and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zealand Pharma AS and United Parcel Service, you can compare the effects of market volatilities on Zealand Pharma and United Parcel 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 Zealand Pharma with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zealand Pharma and United Parcel.
Diversification Opportunities for Zealand Pharma and United Parcel
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zealand and United is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zealand Pharma AS and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and Zealand Pharma 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 Zealand Pharma AS are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Zealand Pharma i.e., Zealand Pharma and United Parcel go up and down completely randomly.
Pair Corralation between Zealand Pharma and United Parcel
Assuming the 90 days trading horizon Zealand Pharma AS is expected to generate 3.52 times more return on investment than United Parcel. However, Zealand Pharma is 3.52 times more volatile than United Parcel Service. It trades about 0.12 of its potential returns per unit of risk. United Parcel Service is currently generating about 0.03 per unit of risk. If you would invest 48,500 in Zealand Pharma AS on February 12, 2024 and sell it today you would earn a total of 17,250 from holding Zealand Pharma AS or generate 35.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.31% |
| Values | Daily Returns |
Zealand Pharma AS vs. United Parcel Service
Performance |
| Timeline |
| Zealand Pharma AS |
| United Parcel Service |
Zealand Pharma and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zealand Pharma and United Parcel
The main advantage of trading using opposite Zealand Pharma and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zealand Pharma position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Zealand Pharma vs. Bavarian Nordic | Zealand Pharma vs. Ambu AS | Zealand Pharma vs. Genmab AS | Zealand Pharma vs. ALK Abell AS |
| United Parcel vs. GXO Logistics | United Parcel vs. JB Hunt Transport | United Parcel vs. Expeditors International of | United Parcel vs. CH Robinson Worldwide |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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