Correlation Between ZSC and Aptos

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

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

Diversification Opportunities for ZSC and Aptos

-0.06

Correlation Coefficient

ZSC  Aptos

Good diversification

The 3 months correlation between ZSC and Aptos is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ZSC and Aptos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptos and ZSC 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 ZSC are associated (or correlated) with Aptos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptos has no effect on the direction of ZSC i.e., ZSC and Aptos go up and down completely randomly.

Pair Corralation between ZSC and Aptos

Assuming the 90 days trading horizon ZSC is expected to generate 7.27 times more return on investment than Aptos. However, ZSC is 7.27 times more volatile than Aptos. It trades about 0.15 of its potential returns per unit of risk. Aptos is currently generating about 0.24 per unit of risk. If you would invest  0.01  in ZSC on September 3, 2024 and sell it today you would lose  0.00  from holding ZSC or give up 40.82% of portfolio value over 90 days.

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

ZSC  vs.  Aptos

ZSC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ZSC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aptos

Risk-Adjusted Performance

18 of 100

Solid

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

Pair Trading with ZSC and Aptos

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

The idea behind ZSC and Aptos 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.