Correlation Between Zegona Communications and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment, you can compare the effects of market volatilities on Zegona Communications and Mercantile Investment 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Mercantile Investment.
Diversification Opportunities for Zegona Communications and Mercantile Investment
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zegona and Mercantile is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Zegona Communications i.e., Zegona Communications and Mercantile Investment go up and down completely randomly.
Pair Corralation between Zegona Communications and Mercantile Investment
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 13.25 times more return on investment than Mercantile Investment. However, Zegona Communications is 13.25 times more volatile than The Mercantile Investment. It trades about 0.05 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.04 per unit of risk. If you would invest 7,950 in Zegona Communications Plc on August 26, 2024 and sell it today you would earn a total of 24,850 from holding Zegona Communications Plc or generate 312.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.6% |
| Values | Daily Returns |
Zegona Communications Plc vs. The Mercantile Investment
Performance |
| Timeline |
| Zegona Communications Plc |
| The Mercantile Investment |
Zegona Communications and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and Mercantile Investment
The main advantage of trading using opposite Zegona Communications and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| Zegona Communications vs. SupplyMe Capital PLC | Zegona Communications vs. Premier African Minerals | Zegona Communications vs. SANTANDER UK 8 | Zegona Communications vs. Vodafone Group PLC |
| Mercantile Investment vs. Catalyst Media Group | Mercantile Investment vs. Oncimmune Holdings plc | Mercantile Investment vs. Invesco Health Care | Mercantile Investment vs. Coor Service Management |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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