Correlation Between ZINC MEDIA and TransAlta

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

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

Diversification Opportunities for ZINC MEDIA and TransAlta

-0.88

Correlation Coefficient

ZINC MEDIA  TransAlta

Pay attention - limited upside

The 3 months correlation between ZINC and TransAlta is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ZINC MEDIA GR and TransAlta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta and ZINC MEDIA 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 ZINC MEDIA GR are associated (or correlated) with TransAlta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta has no effect on the direction of ZINC MEDIA i.e., ZINC MEDIA and TransAlta go up and down completely randomly.

Pair Corralation between ZINC MEDIA and TransAlta

Assuming the 90 days trading horizon ZINC MEDIA GR is expected to under-perform the TransAlta. But the stock apears to be less risky and, when comparing its historical volatility, ZINC MEDIA GR is 1.18 times less risky than TransAlta. The stock trades about -0.21 of its potential returns per unit of risk. The TransAlta is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  930.00  in TransAlta on September 29, 2024 and sell it today you would earn a total of  433.00  from holding TransAlta or generate 46.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

ZINC MEDIA GR  vs.  TransAlta

ZINC MEDIA GR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZINC MEDIA GR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

TransAlta

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TransAlta are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TransAlta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZINC MEDIA and TransAlta

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

The idea behind ZINC MEDIA GR and TransAlta 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.