Correlation Between Zimtu Capital and Berkshire Hathaway

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

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

Diversification Opportunities for Zimtu Capital and Berkshire Hathaway

0.44

Correlation Coefficient

Zimtu Capital  Berkshire Hathaway

Very weak diversification

The 3 months correlation between Zimtu and Berkshire is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zimtu Capital Corp and Berkshire Hathaway CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway CDR and Zimtu Capital 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 Zimtu Capital Corp are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway CDR has no effect on the direction of Zimtu Capital i.e., Zimtu Capital and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Zimtu Capital and Berkshire Hathaway

Given the investment horizon of 90 days Zimtu Capital Corp is expected to generate 8.5 times more return on investment than Berkshire Hathaway. However, Zimtu Capital is 8.5 times more volatile than Berkshire Hathaway CDR. It trades about 0.03 of its potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.1 per unit of risk. If you would invest  5.00  in Zimtu Capital Corp on September 24, 2024 and sell it today you would lose (1.00) from holding Zimtu Capital Corp or give up 20.0% of portfolio value over 90 days.

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

Zimtu Capital Corp  vs.  Berkshire Hathaway CDR

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 unfluctuating basic indicators, Zimtu Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Berkshire Hathaway CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkshire Hathaway CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zimtu Capital and Berkshire Hathaway

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

The idea behind Zimtu Capital Corp and Berkshire Hathaway CDR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.