Correlation Between Zicom and Step One
Can any of the company-specific risk be diversified away by investing in both Zicom and Step One 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 Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zicom Group and Step One Clothing, you can compare the effects of market volatilities on Zicom and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zicom and Step One.
Diversification Opportunities for Zicom and Step One
Very weak diversification
The 3 months correlation between Zicom and Step is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zicom Group and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Zicom i.e., Zicom and Step One go up and down completely randomly.
Pair Corralation between Zicom and Step One
Assuming the 90 days trading horizon Zicom Group is expected to generate 0.88 times more return on investment than Step One. However, Zicom Group is 1.14 times less risky than Step One. It trades about -0.04 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.04 per unit of risk. If you would invest 6.00 in Zicom Group on September 13, 2024 and sell it today you would lose (0.20) from holding Zicom Group or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zicom Group vs. Step One Clothing
Performance |
| Timeline |
| Zicom Group |
| Step One Clothing |
Zicom and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zicom and Step One
The main advantage of trading using opposite Zicom and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zicom position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.The idea behind Zicom Group and Step One Clothing 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.| Step One vs. Black Rock Mining | Step One vs. Regis Healthcare | Step One vs. Dalaroo Metals | Step One vs. Stelar Metals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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