Correlation Between Aelis Farma and ZCCM Investments

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

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

Diversification Opportunities for Aelis Farma and ZCCM Investments

0.11

Correlation Coefficient

Aelis Farma  ZCCM Investments

Average diversification

The 3 months correlation between Aelis and ZCCM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aelis Farma SA and ZCCM Investments Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCCM Investments Holdings and Aelis Farma 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 Aelis Farma SA are associated (or correlated) with ZCCM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZCCM Investments Holdings has no effect on the direction of Aelis Farma i.e., Aelis Farma and ZCCM Investments go up and down completely randomly.

Pair Corralation between Aelis Farma and ZCCM Investments

Assuming the 90 days trading horizon Aelis Farma SA is expected to under-perform the ZCCM Investments. In addition to that, Aelis Farma is 2.81 times more volatile than ZCCM Investments Holdings. It trades about -0.03 of its total potential returns per unit of risk. ZCCM Investments Holdings is currently generating about -0.05 per unit of volatility. If you would invest  133.00  in ZCCM Investments Holdings on December 24, 2024 and sell it today you would lose (21.00) from holding ZCCM Investments Holdings or give up 15.79% of portfolio value over 90 days.

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

Aelis Farma SA  vs.  ZCCM Investments Holdings

Aelis Farma SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aelis Farma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ZCCM Investments Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZCCM Investments Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Aelis Farma and ZCCM Investments

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

The idea behind Aelis Farma SA and ZCCM Investments Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.