Correlation Between Zanaga Iron and Oakley Capital

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

By analyzing existing cross correlation between Zanaga Iron Ore and Oakley Capital Investments, you can compare the effects of market volatilities on Zanaga Iron and Oakley 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 Zanaga Iron with a short position of Oakley Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zanaga Iron and Oakley Capital.

Diversification Opportunities for Zanaga Iron and Oakley Capital

0.65

Correlation Coefficient

Zanaga Iron  Oakley Capital

Poor diversification

The 3 months correlation between Zanaga and Oakley is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zanaga Iron Ore and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves and Zanaga Iron 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 Zanaga Iron Ore are associated (or correlated) with Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of Zanaga Iron i.e., Zanaga Iron and Oakley Capital go up and down completely randomly.

Pair Corralation between Zanaga Iron and Oakley Capital

Assuming the 90 days trading horizon Zanaga Iron Ore is expected to under-perform the Oakley Capital. In addition to that, Zanaga Iron is 5.52 times more volatile than Oakley Capital Investments. It trades about -0.12 of its total potential returns per unit of risk. Oakley Capital Investments is currently generating about -0.15 per unit of volatility. If you would invest  51,567  in Oakley Capital Investments on September 2, 2024 and sell it today you would lose (3,517) from holding Oakley Capital Investments or give up 6.82% of portfolio value over 90 days.

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

Zanaga Iron Ore  vs.  Oakley Capital Investments

Zanaga Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zanaga Iron Ore 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Oakley Capital Inves

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakley Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Zanaga Iron and Oakley Capital

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

The idea behind Zanaga Iron Ore and Oakley Capital Investments 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.