Correlation Between Zegona Communications and Sydbank

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

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

Diversification Opportunities for Zegona Communications and Sydbank

-0.53

Correlation Coefficient

Zegona Communications  Sydbank

Excellent diversification

The 3 months correlation between Zegona and Sydbank is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Zegona Communications i.e., Zegona Communications and Sydbank go up and down completely randomly.

Pair Corralation between Zegona Communications and Sydbank

Assuming the 90 days trading horizon Zegona Communications Plc is expected to under-perform the Sydbank. In addition to that, Zegona Communications is 1.17 times more volatile than Sydbank. It trades about -0.1 of its total potential returns per unit of risk. Sydbank is currently generating about 0.05 per unit of volatility. If you would invest  33,580  in Sydbank on September 21, 2024 and sell it today you would earn a total of  1,680  from holding Sydbank or generate 5.0% return on investment over 90 days.

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

Zegona Communications Plc  vs.  Sydbank

Zegona Communications Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zegona Communications Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sydbank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sydbank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zegona Communications and Sydbank

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

The idea behind Zegona Communications Plc and Sydbank 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.