Correlation Between Legrand SA and Zinc8 Energy
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Zinc8 Energy 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 Legrand SA and Zinc8 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA ADR and Zinc8 Energy Solutions, you can compare the effects of market volatilities on Legrand SA and Zinc8 Energy 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 Legrand SA with a short position of Zinc8 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Zinc8 Energy.
Diversification Opportunities for Legrand SA and Zinc8 Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legrand and Zinc8 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Zinc8 Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc8 Energy Solutions and Legrand SA 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 Legrand SA ADR are associated (or correlated) with Zinc8 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc8 Energy Solutions has no effect on the direction of Legrand SA i.e., Legrand SA and Zinc8 Energy go up and down completely randomly.
Pair Corralation between Legrand SA and Zinc8 Energy
Assuming the 90 days horizon Legrand SA ADR is expected to generate 0.23 times more return on investment than Zinc8 Energy. However, Legrand SA ADR is 4.26 times less risky than Zinc8 Energy. It trades about -0.31 of its potential returns per unit of risk. Zinc8 Energy Solutions is currently generating about -0.37 per unit of risk. If you would invest 2,250 in Legrand SA ADR on September 1, 2024 and sell it today you would lose (257.00) from holding Legrand SA ADR or give up 11.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legrand SA ADR vs. Zinc8 Energy Solutions
Performance |
| Timeline |
| Legrand SA ADR |
| Zinc8 Energy Solutions |
Legrand SA and Zinc8 Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Zinc8 Energy
The main advantage of trading using opposite Legrand SA and Zinc8 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Zinc8 Energy 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 Zinc8 Energy will offset losses from the drop in Zinc8 Energy's long position.| Legrand SA vs. AFC Energy plc | Legrand SA vs. Loop Energy | Legrand SA vs. Sunrise New Energy | Legrand SA vs. Energizer Holdings |
| Zinc8 Energy vs. AFC Energy plc | Zinc8 Energy vs. Loop Energy | Zinc8 Energy vs. Sunrise New Energy | Zinc8 Energy vs. Energizer Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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