Correlation Between Zegona Communications and ImmuPharma PLC
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and ImmuPharma PLC 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 ImmuPharma PLC 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 ImmuPharma PLC, you can compare the effects of market volatilities on Zegona Communications and ImmuPharma PLC 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 ImmuPharma PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and ImmuPharma PLC.
Diversification Opportunities for Zegona Communications and ImmuPharma PLC
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zegona and ImmuPharma is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and ImmuPharma PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImmuPharma PLC 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 ImmuPharma PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImmuPharma PLC has no effect on the direction of Zegona Communications i.e., Zegona Communications and ImmuPharma PLC go up and down completely randomly.
Pair Corralation between Zegona Communications and ImmuPharma PLC
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 1.62 times more return on investment than ImmuPharma PLC. However, Zegona Communications is 1.62 times more volatile than ImmuPharma PLC. It trades about 0.06 of its potential returns per unit of risk. ImmuPharma PLC is currently generating about 0.05 per unit of risk. If you would invest 5,400 in Zegona Communications Plc on October 29, 2024 and sell it today you would earn a total of 35,400 from holding Zegona Communications Plc or generate 655.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.09% |
| Values | Daily Returns |
Zegona Communications Plc vs. ImmuPharma PLC
Performance |
| Timeline |
| Zegona Communications Plc |
| ImmuPharma PLC |
Zegona Communications and ImmuPharma PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and ImmuPharma PLC
The main advantage of trading using opposite Zegona Communications and ImmuPharma PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, ImmuPharma PLC 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 ImmuPharma PLC will offset losses from the drop in ImmuPharma PLC's long position.The idea behind Zegona Communications Plc and ImmuPharma PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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