Correlation Between Telstra and Zicom
Can any of the company-specific risk be diversified away by investing in both Telstra and Zicom 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 Telstra and Zicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telstra and Zicom Group, you can compare the effects of market volatilities on Telstra and Zicom 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 Telstra with a short position of Zicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telstra and Zicom.
Diversification Opportunities for Telstra and Zicom
Pay attention - limited upside
The 3 months correlation between Telstra and Zicom is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telstra and Zicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zicom Group and Telstra 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 Telstra are associated (or correlated) with Zicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zicom Group has no effect on the direction of Telstra i.e., Telstra and Zicom go up and down completely randomly.
Pair Corralation between Telstra and Zicom
Assuming the 90 days trading horizon Telstra is expected to generate 25.27 times less return on investment than Zicom. But when comparing it to its historical volatility, Telstra is 7.3 times less risky than Zicom. It trades about 0.07 of its potential returns per unit of risk. Zicom Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Zicom Group on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Zicom Group or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telstra vs. Zicom Group
Performance |
| Timeline |
| Telstra |
| Zicom Group |
Telstra and Zicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telstra and Zicom
The main advantage of trading using opposite Telstra and Zicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telstra position performs unexpectedly, Zicom 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 Zicom will offset losses from the drop in Zicom's long position.| Telstra vs. Evolution Mining | Telstra vs. Perseus Mining | Telstra vs. Duketon Mining | Telstra vs. Truscott Mining Corp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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