Correlation Between Zegona Communications and OneSavings Bank
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and OneSavings Bank 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 OneSavings Bank 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 OneSavings Bank PLC, you can compare the effects of market volatilities on Zegona Communications and OneSavings Bank 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 OneSavings Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and OneSavings Bank.
Diversification Opportunities for Zegona Communications and OneSavings Bank
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zegona and OneSavings is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and OneSavings Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSavings Bank 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 OneSavings Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSavings Bank PLC has no effect on the direction of Zegona Communications i.e., Zegona Communications and OneSavings Bank go up and down completely randomly.
Pair Corralation between Zegona Communications and OneSavings Bank
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 6.02 times more return on investment than OneSavings Bank. However, Zegona Communications is 6.02 times more volatile than OneSavings Bank PLC. It trades about 0.05 of its potential returns per unit of risk. OneSavings Bank PLC is currently generating about 0.0 per unit of risk. If you would invest 7,650 in Zegona Communications Plc on August 27, 2024 and sell it today you would earn a total of 25,150 from holding Zegona Communications Plc or generate 328.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.12% |
| Values | Daily Returns |
Zegona Communications Plc vs. OneSavings Bank PLC
Performance |
| Timeline |
| Zegona Communications Plc |
| OneSavings Bank PLC |
Zegona Communications and OneSavings Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and OneSavings Bank
The main advantage of trading using opposite Zegona Communications and OneSavings Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, OneSavings Bank 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 OneSavings Bank will offset losses from the drop in OneSavings Bank's long position.The idea behind Zegona Communications Plc and OneSavings Bank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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