Correlation Between ZAMBIA SUGAR and BRITISH AMERICAN
Can any of the company-specific risk be diversified away by investing in both ZAMBIA SUGAR and BRITISH AMERICAN 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 BRITISH AMERICAN 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 BRITISH AMERICAN TOBACCO ZAMBIA, you can compare the effects of market volatilities on ZAMBIA SUGAR and BRITISH AMERICAN 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 BRITISH AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZAMBIA SUGAR and BRITISH AMERICAN.
Diversification Opportunities for ZAMBIA SUGAR and BRITISH AMERICAN
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZAMBIA and BRITISH is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ZAMBIA SUGAR PLC and BRITISH AMERICAN TOBACCO ZAMBI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRITISH AMERICAN TOB 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 BRITISH AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRITISH AMERICAN TOB has no effect on the direction of ZAMBIA SUGAR i.e., ZAMBIA SUGAR and BRITISH AMERICAN go up and down completely randomly.
Pair Corralation between ZAMBIA SUGAR and BRITISH AMERICAN
If you would invest 3,500 in ZAMBIA SUGAR PLC on August 27, 2024 and sell it today you would earn a total of 109.00 from holding ZAMBIA SUGAR PLC or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZAMBIA SUGAR PLC vs. BRITISH AMERICAN TOBACCO ZAMBI
Performance |
| Timeline |
| ZAMBIA SUGAR PLC |
| BRITISH AMERICAN TOB |
ZAMBIA SUGAR and BRITISH AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZAMBIA SUGAR and BRITISH AMERICAN
The main advantage of trading using opposite ZAMBIA SUGAR and BRITISH AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZAMBIA SUGAR position performs unexpectedly, BRITISH AMERICAN 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 BRITISH AMERICAN will offset losses from the drop in BRITISH AMERICAN's long position.| ZAMBIA SUGAR vs. AIRTEL NETWORKS ZAMBIA | ZAMBIA SUGAR vs. NATIONAL BREWERIES PLC | ZAMBIA SUGAR vs. ZAMBIA REINSURANCE PLC |
| BRITISH AMERICAN vs. AIRTEL NETWORKS ZAMBIA | BRITISH AMERICAN vs. NATIONAL BREWERIES PLC | BRITISH AMERICAN vs. ZAMBIA REINSURANCE PLC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |