Correlation Between Altek Corp and Zinwell

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

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

Diversification Opportunities for Altek Corp and Zinwell

0.57

Correlation Coefficient

Altek Corp  Zinwell

Very weak diversification

The 3 months correlation between Altek and Zinwell is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp and Zinwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinwell and Altek Corp 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 Altek Corp are associated (or correlated) with Zinwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinwell has no effect on the direction of Altek Corp i.e., Altek Corp and Zinwell go up and down completely randomly.

Pair Corralation between Altek Corp and Zinwell

Assuming the 90 days trading horizon Altek Corp is expected to under-perform the Zinwell. But the stock apears to be less risky and, when comparing its historical volatility, Altek Corp is 1.19 times less risky than Zinwell. The stock trades about -0.31 of its potential returns per unit of risk. The Zinwell is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  1,780  in Zinwell on September 12, 2024 and sell it today you would lose (165.00) from holding Zinwell or give up 9.27% of portfolio value over 90 days.

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

Altek Corp  vs.  Zinwell

Altek Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altek Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Zinwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Zinwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Altek Corp and Zinwell

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

The idea behind Altek Corp and Zinwell 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.