Correlation Between Colgate Palmolive and ZINZINO AB

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

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

Diversification Opportunities for Colgate Palmolive and ZINZINO AB

-0.27

Correlation Coefficient

Colgate Palmolive  ZINZINO AB

Very good diversification

The 3 months correlation between Colgate and ZINZINO is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and ZINZINO AB B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINZINO AB B and Colgate Palmolive 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 Colgate Palmolive are associated (or correlated) with ZINZINO AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINZINO AB B has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and ZINZINO AB go up and down completely randomly.

Pair Corralation between Colgate Palmolive and ZINZINO AB

Assuming the 90 days horizon Colgate Palmolive is expected to under-perform the ZINZINO AB. But the stock apears to be less risky and, when comparing its historical volatility, Colgate Palmolive is 2.76 times less risky than ZINZINO AB. The stock trades about -0.09 of its potential returns per unit of risk. The ZINZINO AB B is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  830.00  in ZINZINO AB B on October 11, 2024 and sell it today you would earn a total of  23.00  from holding ZINZINO AB B or generate 2.77% return on investment over 90 days.

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

Colgate Palmolive  vs.  ZINZINO AB B

Colgate Palmolive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ZINZINO AB B

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZINZINO AB B are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ZINZINO AB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Colgate Palmolive and ZINZINO AB

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

The idea behind Colgate Palmolive and ZINZINO AB B 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.