Correlation Between Zinwell and United Renewable

Can any of the company-specific risk be diversified away by investing in both Zinwell and United Renewable 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 Zinwell and United Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zinwell and United Renewable Energy, you can compare the effects of market volatilities on Zinwell and United Renewable 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 Zinwell with a short position of United Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zinwell and United Renewable.

Diversification Opportunities for Zinwell and United Renewable

0.69

Correlation Coefficient

Zinwell  United Renewable

Poor diversification

The 3 months correlation between Zinwell and United is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Zinwell and United Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Renewable Energy and Zinwell 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 Zinwell are associated (or correlated) with United Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Renewable Energy has no effect on the direction of Zinwell i.e., Zinwell and United Renewable go up and down completely randomly.

Pair Corralation between Zinwell and United Renewable

Assuming the 90 days trading horizon Zinwell is expected to under-perform the United Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Zinwell is 1.3 times less risky than United Renewable. The stock trades about -0.18 of its potential returns per unit of risk. The United Renewable Energy is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,070  in United Renewable Energy on September 28, 2024 and sell it today you would lose (15.00) from holding United Renewable Energy or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Zinwell  vs.  United Renewable Energy

Zinwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

United Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Zinwell and United Renewable

The main advantage of trading using opposite Zinwell and United Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zinwell position performs unexpectedly, United Renewable 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 United Renewable will offset losses from the drop in United Renewable's long position.

The idea behind Zinwell and United Renewable Energy 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.