Correlation Between Brickability Group and ZKH Group

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

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

Diversification Opportunities for Brickability Group and ZKH Group

0.23

Correlation Coefficient

Brickability Group  ZKH Group

Modest diversification

The 3 months correlation between Brickability and ZKH is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brickability Group Plc and ZKH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKH Group Limited and Brickability Group 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 Brickability Group Plc are associated (or correlated) with ZKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKH Group Limited has no effect on the direction of Brickability Group i.e., Brickability Group and ZKH Group go up and down completely randomly.

Pair Corralation between Brickability Group and ZKH Group

Assuming the 90 days trading horizon Brickability Group Plc is expected to under-perform the ZKH Group. In addition to that, Brickability Group is 1.02 times more volatile than ZKH Group Limited. It trades about -0.01 of its total potential returns per unit of risk. ZKH Group Limited is currently generating about 0.01 per unit of volatility. If you would invest  365.00  in ZKH Group Limited on October 25, 2024 and sell it today you would lose (1.00) from holding ZKH Group Limited or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Brickability Group Plc  vs.  ZKH Group Limited

Brickability Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brickability Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Brickability Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ZKH Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKH Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, ZKH Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Brickability Group and ZKH Group

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

The idea behind Brickability Group Plc and ZKH Group Limited 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.