Correlation Between First Majestic and ZJK Industrial

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

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

Diversification Opportunities for First Majestic and ZJK Industrial

-0.42

Correlation Coefficient

First Majestic  ZJK Industrial

Very good diversification

The 3 months correlation between First and ZJK is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and ZJK Industrial Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZJK Industrial Co, and First Majestic 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 First Majestic Silver are associated (or correlated) with ZJK Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZJK Industrial Co, has no effect on the direction of First Majestic i.e., First Majestic and ZJK Industrial go up and down completely randomly.

Pair Corralation between First Majestic and ZJK Industrial

Allowing for the 90-day total investment horizon First Majestic is expected to generate 31.31 times less return on investment than ZJK Industrial. But when comparing it to its historical volatility, First Majestic Silver is 6.32 times less risky than ZJK Industrial. It trades about 0.02 of its potential returns per unit of risk. ZJK Industrial Co, is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  500.00  in ZJK Industrial Co, on October 5, 2024 and sell it today you would earn a total of  501.00  from holding ZJK Industrial Co, or generate 100.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	25.0%
Values	Daily Returns

First Majestic Silver  vs.  ZJK Industrial Co,

First Majestic Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, First Majestic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ZJK Industrial Co,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZJK Industrial Co, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking indicators, ZJK Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and ZJK Industrial

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

The idea behind First Majestic Silver and ZJK Industrial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.