Correlation Between Witbe Net and ZCCM Investments

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

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

Diversification Opportunities for Witbe Net and ZCCM Investments

0.5

Correlation Coefficient

Witbe Net  ZCCM Investments

Very weak diversification

The 3 months correlation between Witbe and ZCCM is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Witbe Net 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 Witbe Net 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 Witbe Net 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 Witbe Net i.e., Witbe Net and ZCCM Investments go up and down completely randomly.

Pair Corralation between Witbe Net and ZCCM Investments

Assuming the 90 days trading horizon Witbe Net SA is expected to under-perform the ZCCM Investments. In addition to that, Witbe Net is 1.15 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 -0.01 per unit of volatility. If you would invest  148.00  in ZCCM Investments Holdings on September 30, 2024 and sell it today you would lose (16.00) from holding ZCCM Investments Holdings or give up 10.81% of portfolio value over 90 days.

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

Witbe Net SA  vs.  ZCCM Investments Holdings

Witbe Net SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Witbe Net SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Witbe Net reported solid returns over the last few months and may actually be approaching a breakup point.

ZCCM Investments Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZCCM Investments Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, ZCCM Investments is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Witbe Net and ZCCM Investments

The main advantage of trading using opposite Witbe Net and ZCCM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Witbe Net 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 Witbe Net 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.