Correlation Between Pengana Private and Zip Co

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

By analyzing existing cross correlation between Pengana Private Equity and Zip Co Limited, you can compare the effects of market volatilities on Pengana Private and Zip Co 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 Pengana Private with a short position of Zip Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pengana Private and Zip Co.

Diversification Opportunities for Pengana Private and Zip Co

-0.36

Correlation Coefficient

Pengana Private  Zip Co

Very good diversification

The 3 months correlation between Pengana and Zip is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pengana Private Equity and Zip Co Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zip Co Limited and Pengana Private 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 Pengana Private Equity are associated (or correlated) with Zip Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zip Co Limited has no effect on the direction of Pengana Private i.e., Pengana Private and Zip Co go up and down completely randomly.

Pair Corralation between Pengana Private and Zip Co

Assuming the 90 days trading horizon Pengana Private Equity is expected to under-perform the Zip Co. But the stock apears to be less risky and, when comparing its historical volatility, Pengana Private Equity is 2.11 times less risky than Zip Co. The stock trades about -0.06 of its potential returns per unit of risk. The Zip Co Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Zip Co Limited on September 2, 2024 and sell it today you would earn a total of  112.00  from holding Zip Co Limited or generate 48.7% return on investment over 90 days.

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

Pengana Private Equity  vs.  Zip Co Limited

Pengana Private Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pengana Private Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pengana Private is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Zip Co Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zip Co Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zip Co unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pengana Private and Zip Co

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

The idea behind Pengana Private Equity and Zip Co Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.