Correlation Between Eros Resources and Zinc One

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

By analyzing existing cross correlation between Eros Resources Corp and Zinc One Resources, you can compare the effects of market volatilities on Eros Resources and Zinc One 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 Eros Resources with a short position of Zinc One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros Resources and Zinc One.

Diversification Opportunities for Eros Resources and Zinc One

-0.46

Correlation Coefficient

Eros Resources  Zinc One

Very good diversification

The 3 months correlation between Eros and Zinc is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and Zinc One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc One Resources and Eros Resources 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 Eros Resources Corp are associated (or correlated) with Zinc One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc One Resources has no effect on the direction of Eros Resources i.e., Eros Resources and Zinc One go up and down completely randomly.

Pair Corralation between Eros Resources and Zinc One

Assuming the 90 days horizon Eros Resources Corp is expected to generate 181.82 times more return on investment than Zinc One. However, Eros Resources is 181.82 times more volatile than Zinc One Resources. It trades about 0.01 of its potential returns per unit of risk. Zinc One Resources is currently generating about -0.15 per unit of risk. If you would invest  3.08  in Eros Resources Corp on September 3, 2024 and sell it today you would lose (0.29) from holding Eros Resources Corp or give up 9.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.31%
Values	Daily Returns

Eros Resources Corp  vs.  Zinc One Resources

Eros Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zinc One Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eros Resources and Zinc One

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

The idea behind Eros Resources Corp and Zinc One Resources 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.