Correlation Between EAGLE MATERIALS and ZINC MEDIA

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

By analyzing existing cross correlation between EAGLE MATERIALS and ZINC MEDIA GR, you can compare the effects of market volatilities on EAGLE MATERIALS and ZINC MEDIA 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 EAGLE MATERIALS with a short position of ZINC MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and ZINC MEDIA.

Diversification Opportunities for EAGLE MATERIALS and ZINC MEDIA

0.25

Correlation Coefficient

EAGLE MATERIALS  ZINC MEDIA

Modest diversification

The 3 months correlation between EAGLE and ZINC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and ZINC MEDIA GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINC MEDIA GR and EAGLE MATERIALS 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 EAGLE MATERIALS are associated (or correlated) with ZINC MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINC MEDIA GR has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and ZINC MEDIA go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and ZINC MEDIA

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the ZINC MEDIA. But the stock apears to be less risky and, when comparing its historical volatility, EAGLE MATERIALS is 2.05 times less risky than ZINC MEDIA. The stock trades about -0.56 of its potential returns per unit of risk. The ZINC MEDIA GR is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  54.00  in ZINC MEDIA GR on October 12, 2024 and sell it today you would earn a total of  9.00  from holding ZINC MEDIA GR or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

EAGLE MATERIALS  vs.  ZINC MEDIA GR

EAGLE MATERIALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAGLE MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ZINC MEDIA GR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZINC MEDIA GR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EAGLE MATERIALS and ZINC MEDIA

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

The idea behind EAGLE MATERIALS and ZINC MEDIA GR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.