Correlation Between Summit Materials and ZENERGY B

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

By analyzing existing cross correlation between Summit Materials and ZENERGY B AB, you can compare the effects of market volatilities on Summit Materials and ZENERGY B 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 Summit Materials with a short position of ZENERGY B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and ZENERGY B.

Diversification Opportunities for Summit Materials and ZENERGY B

-0.48

Correlation Coefficient

Summit Materials  ZENERGY B

Very good diversification

The 3 months correlation between Summit and ZENERGY is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and ZENERGY B AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENERGY B AB and Summit Materials 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 Summit Materials are associated (or correlated) with ZENERGY B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENERGY B AB has no effect on the direction of Summit Materials i.e., Summit Materials and ZENERGY B go up and down completely randomly.

Pair Corralation between Summit Materials and ZENERGY B

Assuming the 90 days trading horizon Summit Materials is expected to generate 0.59 times more return on investment than ZENERGY B. However, Summit Materials is 1.69 times less risky than ZENERGY B. It trades about 0.23 of its potential returns per unit of risk. ZENERGY B AB is currently generating about -0.18 per unit of risk. If you would invest  3,480  in Summit Materials on September 22, 2024 and sell it today you would earn a total of  1,340  from holding Summit Materials or generate 38.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Summit Materials  vs.  ZENERGY B AB

Summit Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

ZENERGY B AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZENERGY B AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Summit Materials and ZENERGY B

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

The idea behind Summit Materials and ZENERGY B AB 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.