Correlation Between Zicom and Retail Food
Can any of the company-specific risk be diversified away by investing in both Zicom and Retail Food 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 Zicom and Retail Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zicom Group and Retail Food Group, you can compare the effects of market volatilities on Zicom and Retail Food 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 Zicom with a short position of Retail Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zicom and Retail Food.
Diversification Opportunities for Zicom and Retail Food
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zicom and Retail is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zicom Group and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group and Zicom 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 Zicom Group are associated (or correlated) with Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Zicom i.e., Zicom and Retail Food go up and down completely randomly.
Pair Corralation between Zicom and Retail Food
Assuming the 90 days trading horizon Zicom Group is expected to generate 1.51 times more return on investment than Retail Food. However, Zicom is 1.51 times more volatile than Retail Food Group. It trades about -0.02 of its potential returns per unit of risk. Retail Food Group is currently generating about -0.1 per unit of risk. If you would invest 6.80 in Zicom Group on October 24, 2024 and sell it today you would lose (0.80) from holding Zicom Group or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zicom Group vs. Retail Food Group
Performance |
| Timeline |
| Zicom Group |
| Retail Food Group |
Zicom and Retail Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zicom and Retail Food
The main advantage of trading using opposite Zicom and Retail Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zicom position performs unexpectedly, Retail Food 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 Retail Food will offset losses from the drop in Retail Food's long position.The idea behind Zicom Group and Retail Food Group 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.| Retail Food vs. Aneka Tambang Tbk | Retail Food vs. BHP Group Limited | Retail Food vs. Commonwealth Bank of | Retail Food vs. Commonwealth Bank of |
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.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |