Correlation Between ZB FINANCIAL and AFRICAN DISTILLERS
Can any of the company-specific risk be diversified away by investing in both ZB FINANCIAL and AFRICAN DISTILLERS 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 ZB FINANCIAL and AFRICAN DISTILLERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZB FINANCIAL HOLDINGS and AFRICAN DISTILLERS LIMITED, you can compare the effects of market volatilities on ZB FINANCIAL and AFRICAN DISTILLERS 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 ZB FINANCIAL with a short position of AFRICAN DISTILLERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZB FINANCIAL and AFRICAN DISTILLERS.
Diversification Opportunities for ZB FINANCIAL and AFRICAN DISTILLERS
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZBFH and AFRICAN is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ZB FINANCIAL HOLDINGS and AFRICAN DISTILLERS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFRICAN DISTILLERS and ZB FINANCIAL 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 ZB FINANCIAL HOLDINGS are associated (or correlated) with AFRICAN DISTILLERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFRICAN DISTILLERS has no effect on the direction of ZB FINANCIAL i.e., ZB FINANCIAL and AFRICAN DISTILLERS go up and down completely randomly.
Pair Corralation between ZB FINANCIAL and AFRICAN DISTILLERS
Assuming the 90 days trading horizon ZB FINANCIAL HOLDINGS is expected to under-perform the AFRICAN DISTILLERS. In addition to that, ZB FINANCIAL is 14.89 times more volatile than AFRICAN DISTILLERS LIMITED. It trades about -0.32 of its total potential returns per unit of risk. AFRICAN DISTILLERS LIMITED is currently generating about 0.22 per unit of volatility. If you would invest 69,100 in AFRICAN DISTILLERS LIMITED on October 28, 2024 and sell it today you would earn a total of 900.00 from holding AFRICAN DISTILLERS LIMITED or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZB FINANCIAL HOLDINGS vs. AFRICAN DISTILLERS LIMITED
Performance |
| Timeline |
| ZB FINANCIAL HOLDINGS |
| AFRICAN DISTILLERS |
ZB FINANCIAL and AFRICAN DISTILLERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZB FINANCIAL and AFRICAN DISTILLERS
The main advantage of trading using opposite ZB FINANCIAL and AFRICAN DISTILLERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZB FINANCIAL position performs unexpectedly, AFRICAN DISTILLERS 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 AFRICAN DISTILLERS will offset losses from the drop in AFRICAN DISTILLERS's long position.| ZB FINANCIAL vs. FIRST MUTUAL PROPERTIES | ZB FINANCIAL vs. BRITISH AMERICAN TOBACCO | ZB FINANCIAL vs. TANGANDA TEA PANY | ZB FINANCIAL vs. Cass Saddle Agriculture |
| AFRICAN DISTILLERS vs. FIRST MUTUAL PROPERTIES | AFRICAN DISTILLERS vs. BRITISH AMERICAN TOBACCO | AFRICAN DISTILLERS vs. TANGANDA TEA PANY | AFRICAN DISTILLERS vs. ZB FINANCIAL 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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