Correlation Between Zimplats Holdings and Leocor Gold
Can any of the company-specific risk be diversified away by investing in both Zimplats Holdings and Leocor 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 Leocor 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 Leocor Gold, you can compare the effects of market volatilities on Zimplats Holdings and Leocor 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 Leocor Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimplats Holdings and Leocor Gold.
Diversification Opportunities for Zimplats Holdings and Leocor Gold
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zimplats and Leocor is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Leocor Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leocor Gold 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 Leocor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leocor Gold has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Leocor Gold go up and down completely randomly.
Pair Corralation between Zimplats Holdings and Leocor Gold
Assuming the 90 days horizon Zimplats Holdings is expected to generate 2.91 times less return on investment than Leocor Gold. But when comparing it to its historical volatility, Zimplats Holdings Limited is 2.08 times less risky than Leocor Gold. It trades about 0.13 of its potential returns per unit of risk. Leocor Gold is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7.54 in Leocor Gold on September 1, 2024 and sell it today you would earn a total of 2.22 from holding Leocor Gold or generate 29.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Zimplats Holdings Limited vs. Leocor Gold
Performance |
| Timeline |
| Zimplats Holdings |
| Leocor Gold |
Zimplats Holdings and Leocor Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zimplats Holdings and Leocor Gold
The main advantage of trading using opposite Zimplats Holdings and Leocor Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimplats Holdings position performs unexpectedly, Leocor 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 Leocor Gold will offset losses from the drop in Leocor Gold's long position.| Zimplats Holdings vs. Defiance Silver Corp | Zimplats Holdings vs. HUMANA INC | Zimplats Holdings vs. SCOR PK | Zimplats Holdings vs. Aquagold International |
| Leocor Gold vs. Defiance Silver Corp | Leocor Gold vs. HUMANA INC | Leocor Gold vs. SCOR PK | Leocor Gold vs. Aquagold International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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