Correlation Between ZEN Graphene and AAP
Can any of the company-specific risk be diversified away by investing in both ZEN Graphene and AAP 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 ZEN Graphene and AAP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZEN Graphene Solutions and AAP Inc, you can compare the effects of market volatilities on ZEN Graphene and AAP 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 ZEN Graphene with a short position of AAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZEN Graphene and AAP.
Diversification Opportunities for ZEN Graphene and AAP
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ZEN and AAP is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ZEN Graphene Solutions and AAP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAP Inc and ZEN Graphene 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 ZEN Graphene Solutions are associated (or correlated) with AAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAP Inc has no effect on the direction of ZEN Graphene i.e., ZEN Graphene and AAP go up and down completely randomly.
Pair Corralation between ZEN Graphene and AAP
Given the investment horizon of 90 days ZEN Graphene is expected to generate 58.43 times less return on investment than AAP. But when comparing it to its historical volatility, ZEN Graphene Solutions is 7.64 times less risky than AAP. It trades about 0.02 of its potential returns per unit of risk. AAP Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.03 in AAP Inc on September 1, 2024 and sell it today you would lose (0.01) from holding AAP Inc or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
ZEN Graphene Solutions vs. AAP Inc
Performance |
| Timeline |
| ZEN Graphene Solutions |
| AAP Inc |
ZEN Graphene and AAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZEN Graphene and AAP
The main advantage of trading using opposite ZEN Graphene and AAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZEN Graphene position performs unexpectedly, AAP 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 AAP will offset losses from the drop in AAP's long position.| ZEN Graphene vs. Milestone Scientific | ZEN Graphene vs. Pro Dex | ZEN Graphene vs. Top Glove | ZEN Graphene vs. Precision Optics, |
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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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