Correlation Between Zimplats Holdings and American Sierra

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

By analyzing existing cross correlation between Zimplats Holdings Limited and American Sierra Gold, you can compare the effects of market volatilities on Zimplats Holdings and American Sierra 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 Zimplats Holdings with a short position of American Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimplats Holdings and American Sierra.

Diversification Opportunities for Zimplats Holdings and American Sierra

0.17

Correlation Coefficient

Zimplats Holdings  American Sierra

Average diversification

The 3 months correlation between Zimplats and American is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and American Sierra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Sierra Gold and Zimplats Holdings 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 Zimplats Holdings Limited are associated (or correlated) with American Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Sierra Gold has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and American Sierra go up and down completely randomly.

Pair Corralation between Zimplats Holdings and American Sierra

If you would invest  0.50  in American Sierra Gold on September 26, 2024 and sell it today you would earn a total of  0.00  from holding American Sierra Gold or generate 0.0% return on investment over 90 days.

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

Zimplats Holdings Limited  vs.  American Sierra Gold

Zimplats Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zimplats Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Zimplats Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

American Sierra Gold

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Sierra Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, American Sierra reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimplats Holdings and American Sierra

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

The idea behind Zimplats Holdings Limited and American Sierra Gold 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.