Correlation Between ZAMBIA SUGAR and AECI MINING
Can any of the company-specific risk be diversified away by investing in both ZAMBIA SUGAR and AECI MINING 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 ZAMBIA SUGAR and AECI MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZAMBIA SUGAR PLC and AECI MINING EXPLOSIVES, you can compare the effects of market volatilities on ZAMBIA SUGAR and AECI MINING 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 ZAMBIA SUGAR with a short position of AECI MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZAMBIA SUGAR and AECI MINING.
Diversification Opportunities for ZAMBIA SUGAR and AECI MINING
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ZAMBIA and AECI is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ZAMBIA SUGAR PLC and AECI MINING EXPLOSIVES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI MINING EXPLOSIVES and ZAMBIA SUGAR 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 ZAMBIA SUGAR PLC are associated (or correlated) with AECI MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI MINING EXPLOSIVES has no effect on the direction of ZAMBIA SUGAR i.e., ZAMBIA SUGAR and AECI MINING go up and down completely randomly.
Pair Corralation between ZAMBIA SUGAR and AECI MINING
Assuming the 90 days trading horizon ZAMBIA SUGAR PLC is expected to generate 1.83 times more return on investment than AECI MINING. However, ZAMBIA SUGAR is 1.83 times more volatile than AECI MINING EXPLOSIVES. It trades about 0.22 of its potential returns per unit of risk. AECI MINING EXPLOSIVES is currently generating about -0.22 per unit of risk. If you would invest 3,500 in ZAMBIA SUGAR PLC on August 24, 2024 and sell it today you would earn a total of 104.00 from holding ZAMBIA SUGAR PLC or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ZAMBIA SUGAR PLC vs. AECI MINING EXPLOSIVES
Performance |
| Timeline |
| ZAMBIA SUGAR PLC |
| AECI MINING EXPLOSIVES |
ZAMBIA SUGAR and AECI MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZAMBIA SUGAR and AECI MINING
The main advantage of trading using opposite ZAMBIA SUGAR and AECI MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZAMBIA SUGAR position performs unexpectedly, AECI MINING 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 AECI MINING will offset losses from the drop in AECI MINING's long position.| ZAMBIA SUGAR vs. STANDARD CHARTERED BANK | ZAMBIA SUGAR vs. METAL FABRICATORS OF | ZAMBIA SUGAR vs. AECI MINING EXPLOSIVES | ZAMBIA SUGAR vs. BRITISH AMERICAN TOBACCO ZAMBIA |
| AECI MINING vs. STANDARD CHARTERED BANK | AECI MINING vs. METAL FABRICATORS OF | AECI MINING vs. ZAMBIA SUGAR PLC | AECI MINING vs. BRITISH AMERICAN TOBACCO ZAMBIA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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