Correlation Between Zoje Resources and Industrial Bank

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

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

Diversification Opportunities for Zoje Resources and Industrial Bank

-0.33

Correlation Coefficient

Zoje Resources  Industrial Bank

Very good diversification

The 3 months correlation between Zoje and Industrial is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Zoje Resources Investment and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Zoje Resources 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 Zoje Resources Investment are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Zoje Resources i.e., Zoje Resources and Industrial Bank go up and down completely randomly.

Pair Corralation between Zoje Resources and Industrial Bank

Assuming the 90 days trading horizon Zoje Resources Investment is expected to generate 2.63 times more return on investment than Industrial Bank. However, Zoje Resources is 2.63 times more volatile than Industrial Bank Co. It trades about 0.07 of its potential returns per unit of risk. Industrial Bank Co is currently generating about 0.03 per unit of risk. If you would invest  111.00  in Zoje Resources Investment on October 4, 2024 and sell it today you would earn a total of  139.00  from holding Zoje Resources Investment or generate 125.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Zoje Resources Investment  vs.  Industrial Bank Co

Zoje Resources Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zoje Resources Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zoje Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Industrial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Bank Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Industrial Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zoje Resources and Industrial Bank

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

The idea behind Zoje Resources Investment and Industrial Bank Co 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..