Correlation Between Roctool and ZCCM Investments

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

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

Diversification Opportunities for Roctool and ZCCM Investments

-0.45

Correlation Coefficient

Roctool  ZCCM Investments

Very good diversification

The 3 months correlation between Roctool and ZCCM is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Roctool and ZCCM Investments Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCCM Investments Holdings and Roctool 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 Roctool are associated (or correlated) with ZCCM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZCCM Investments Holdings has no effect on the direction of Roctool i.e., Roctool and ZCCM Investments go up and down completely randomly.

Pair Corralation between Roctool and ZCCM Investments

Assuming the 90 days trading horizon Roctool is expected to under-perform the ZCCM Investments. In addition to that, Roctool is 2.77 times more volatile than ZCCM Investments Holdings. It trades about -0.02 of its total potential returns per unit of risk. ZCCM Investments Holdings is currently generating about 0.02 per unit of volatility. If you would invest  131.00  in ZCCM Investments Holdings on September 25, 2024 and sell it today you would earn a total of  2.00  from holding ZCCM Investments Holdings or generate 1.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Roctool  vs.  ZCCM Investments Holdings

Roctool

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roctool has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ZCCM Investments Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZCCM Investments Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, ZCCM Investments is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Roctool and ZCCM Investments

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

The idea behind Roctool and ZCCM Investments Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.