Correlation Between Eos Energy and Zinc8 Energy

Can any of the company-specific risk be diversified away by investing in both Eos Energy and Zinc8 Energy 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 Eos Energy and Zinc8 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eos Energy Enterprises and Zinc8 Energy Solutions, you can compare the effects of market volatilities on Eos Energy and Zinc8 Energy 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 Eos Energy with a short position of Zinc8 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eos Energy and Zinc8 Energy.

Diversification Opportunities for Eos Energy and Zinc8 Energy

-0.06

Correlation Coefficient

Eos Energy  Zinc8 Energy

Good diversification

The 3 months correlation between Eos and Zinc8 is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Zinc8 Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc8 Energy Solutions and Eos Energy 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 Eos Energy Enterprises are associated (or correlated) with Zinc8 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc8 Energy Solutions has no effect on the direction of Eos Energy i.e., Eos Energy and Zinc8 Energy go up and down completely randomly.

Pair Corralation between Eos Energy and Zinc8 Energy

Assuming the 90 days horizon Eos Energy Enterprises is expected to generate 1.67 times more return on investment than Zinc8 Energy. However, Eos Energy is 1.67 times more volatile than Zinc8 Energy Solutions. It trades about 0.36 of its potential returns per unit of risk. Zinc8 Energy Solutions is currently generating about -0.04 per unit of risk. If you would invest  18.00  in Eos Energy Enterprises on September 23, 2024 and sell it today you would earn a total of  35.00  from holding Eos Energy Enterprises or generate 194.44% return on investment over 90 days.

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

Eos Energy Enterprises  vs.  Zinc8 Energy Solutions

Eos Energy Enterprises

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Eos Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Zinc8 Energy Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinc8 Energy Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Eos Energy and Zinc8 Energy

The main advantage of trading using opposite Eos Energy and Zinc8 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eos Energy position performs unexpectedly, Zinc8 Energy 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 Zinc8 Energy will offset losses from the drop in Zinc8 Energy's long position.

The idea behind Eos Energy Enterprises and Zinc8 Energy Solutions 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.