Correlation Between Great Atlantic and Zimtu Capital

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

By analyzing existing cross correlation between Great Atlantic Resources and Zimtu Capital Corp, you can compare the effects of market volatilities on Great Atlantic and Zimtu Capital 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 Great Atlantic with a short position of Zimtu Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Atlantic and Zimtu Capital.

Diversification Opportunities for Great Atlantic and Zimtu Capital

-0.68

Correlation Coefficient

Great Atlantic  Zimtu Capital

Excellent diversification

The 3 months correlation between Great and Zimtu is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Great Atlantic Resources and Zimtu Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimtu Capital Corp and Great Atlantic 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 Great Atlantic Resources are associated (or correlated) with Zimtu Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimtu Capital Corp has no effect on the direction of Great Atlantic i.e., Great Atlantic and Zimtu Capital go up and down completely randomly.

Pair Corralation between Great Atlantic and Zimtu Capital

Given the investment horizon of 90 days Great Atlantic Resources is expected to generate 1.37 times more return on investment than Zimtu Capital. However, Great Atlantic is 1.37 times more volatile than Zimtu Capital Corp. It trades about 0.04 of its potential returns per unit of risk. Zimtu Capital Corp is currently generating about 0.04 per unit of risk. If you would invest  7.00  in Great Atlantic Resources on September 24, 2024 and sell it today you would lose (1.00) from holding Great Atlantic Resources or give up 14.29% of portfolio value over 90 days.

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

Great Atlantic Resources  vs.  Zimtu Capital Corp

Great Atlantic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Atlantic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Great Atlantic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Zimtu Capital Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zimtu Capital Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zimtu Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Atlantic and Zimtu Capital

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

The idea behind Great Atlantic Resources and Zimtu Capital Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.