Correlation Between Zegona Communications and SM Energy
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and SM 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 Zegona Communications and SM Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and SM Energy Co, you can compare the effects of market volatilities on Zegona Communications and SM 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 Zegona Communications with a short position of SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and SM Energy.
Diversification Opportunities for Zegona Communications and SM Energy
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zegona and 0KZA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of Zegona Communications i.e., Zegona Communications and SM Energy go up and down completely randomly.
Pair Corralation between Zegona Communications and SM Energy
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 6.15 times more return on investment than SM Energy. However, Zegona Communications is 6.15 times more volatile than SM Energy Co. It trades about 0.05 of its potential returns per unit of risk. SM Energy Co is currently generating about 0.04 per unit of risk. If you would invest 7,950 in Zegona Communications Plc on September 3, 2024 and sell it today you would earn a total of 26,850 from holding Zegona Communications Plc or generate 337.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.57% |
| Values | Daily Returns |
Zegona Communications Plc vs. SM Energy Co
Performance |
| Timeline |
| Zegona Communications Plc |
| SM Energy |
Zegona Communications and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and SM Energy
The main advantage of trading using opposite Zegona Communications and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, SM 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 SM Energy will offset losses from the drop in SM Energy's long position.| Zegona Communications vs. CleanTech Lithium plc | Zegona Communications vs. Diversified Energy | Zegona Communications vs. Bankers Investment Trust | Zegona Communications vs. Mindflair Plc |
| SM Energy vs. Gaztransport et Technigaz | SM Energy vs. Schroders Investment Trusts | SM Energy vs. United States Steel | SM Energy vs. Zanaga Iron Ore |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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