Correlation Between Top Glove and ZEN Graphene
Can any of the company-specific risk be diversified away by investing in both Top Glove and ZEN Graphene 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 Top Glove and ZEN Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Glove and ZEN Graphene Solutions, you can compare the effects of market volatilities on Top Glove and ZEN Graphene 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 Top Glove with a short position of ZEN Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Glove and ZEN Graphene.
Diversification Opportunities for Top Glove and ZEN Graphene
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Top and ZEN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and ZEN Graphene Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN Graphene Solutions and Top Glove 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 Top Glove are associated (or correlated) with ZEN Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN Graphene Solutions has no effect on the direction of Top Glove i.e., Top Glove and ZEN Graphene go up and down completely randomly.
Pair Corralation between Top Glove and ZEN Graphene
Assuming the 90 days horizon Top Glove is expected to generate 0.88 times more return on investment than ZEN Graphene. However, Top Glove is 1.13 times less risky than ZEN Graphene. It trades about 0.04 of its potential returns per unit of risk. ZEN Graphene Solutions is currently generating about 0.03 per unit of risk. If you would invest 22.00 in Top Glove on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Top Glove or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Top Glove vs. ZEN Graphene Solutions
Performance |
| Timeline |
| Top Glove |
| ZEN Graphene Solutions |
Top Glove and ZEN Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Glove and ZEN Graphene
The main advantage of trading using opposite Top Glove and ZEN Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Glove position performs unexpectedly, ZEN Graphene 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 ZEN Graphene will offset losses from the drop in ZEN Graphene's long position.| Top Glove vs. Sysmex Corp | Top Glove vs. Coloplast AS | Top Glove vs. Essilor International SA | Top Glove vs. Coloplast A |
| ZEN Graphene vs. Milestone Scientific | ZEN Graphene vs. Pro Dex | ZEN Graphene vs. Top Glove | ZEN Graphene vs. Precision Optics, |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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