Correlation Between Zimplats Holdings and Austral Gold
Can any of the company-specific risk be diversified away by investing in both Zimplats Holdings and Austral Gold 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 Zimplats Holdings and Austral Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zimplats Holdings Limited and Austral Gold Limited, you can compare the effects of market volatilities on Zimplats Holdings and Austral Gold 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 Zimplats Holdings with a short position of Austral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimplats Holdings and Austral Gold.
Diversification Opportunities for Zimplats Holdings and Austral Gold
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zimplats and Austral is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Austral Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austral Gold Limited and Zimplats Holdings 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 Zimplats Holdings Limited are associated (or correlated) with Austral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austral Gold Limited has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Austral Gold go up and down completely randomly.
Pair Corralation between Zimplats Holdings and Austral Gold
Assuming the 90 days horizon Zimplats Holdings Limited is expected to under-perform the Austral Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zimplats Holdings Limited is 9.24 times less risky than Austral Gold. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Austral Gold Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.12 in Austral Gold Limited on September 28, 2024 and sell it today you would lose (0.92) from holding Austral Gold Limited or give up 29.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Zimplats Holdings Limited vs. Austral Gold Limited
Performance |
| Timeline |
| Zimplats Holdings |
| Austral Gold Limited |
Zimplats Holdings and Austral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zimplats Holdings and Austral Gold
The main advantage of trading using opposite Zimplats Holdings and Austral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimplats Holdings position performs unexpectedly, Austral Gold 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 Austral Gold will offset losses from the drop in Austral Gold's long position.The idea behind Zimplats Holdings Limited and Austral Gold Limited 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.| Austral Gold vs. Compania de Minas | Austral Gold vs. Triple Flag Precious | Austral Gold vs. Zimplats Holdings Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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