Correlation Between Schroders Investment and Zegona Communications

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

By analyzing existing cross correlation between Schroders Investment Trusts and Zegona Communications Plc, you can compare the effects of market volatilities on Schroders Investment and Zegona Communications 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 Schroders Investment with a short position of Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schroders Investment and Zegona Communications.

Diversification Opportunities for Schroders Investment and Zegona Communications

-0.08

Correlation Coefficient

Schroders Investment  Zegona Communications

Good diversification

The 3 months correlation between Schroders and Zegona is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Schroders Investment Trusts and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc and Schroders Investment 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 Schroders Investment Trusts are associated (or correlated) with Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Schroders Investment i.e., Schroders Investment and Zegona Communications go up and down completely randomly.

Pair Corralation between Schroders Investment and Zegona Communications

Assuming the 90 days trading horizon Schroders Investment is expected to generate 17.31 times less return on investment than Zegona Communications. But when comparing it to its historical volatility, Schroders Investment Trusts is 16.1 times less risky than Zegona Communications. It trades about 0.04 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,950  in Zegona Communications Plc on September 20, 2024 and sell it today you would earn a total of  23,450  from holding Zegona Communications Plc or generate 294.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.43%
Values	Daily Returns

Schroders Investment Trusts  vs.  Zegona Communications Plc

Schroders Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schroders Investment Trusts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Schroders Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Zegona Communications Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zegona Communications Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Schroders Investment and Zegona Communications

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

The idea behind Schroders Investment Trusts and Zegona Communications Plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.