Correlation Between EPC Groupe and ZCCM Investments

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

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

Diversification Opportunities for EPC Groupe and ZCCM Investments

-0.71

Correlation Coefficient

EPC Groupe  ZCCM Investments

Pay attention - limited upside

The 3 months correlation between EPC and ZCCM is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding EPC Groupe 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 EPC Groupe 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 EPC Groupe 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 EPC Groupe i.e., EPC Groupe and ZCCM Investments go up and down completely randomly.

Pair Corralation between EPC Groupe and ZCCM Investments

Assuming the 90 days trading horizon EPC Groupe is expected to generate 0.38 times more return on investment than ZCCM Investments. However, EPC Groupe is 2.64 times less risky than ZCCM Investments. It trades about 0.09 of its potential returns per unit of risk. ZCCM Investments Holdings is currently generating about -0.04 per unit of risk. If you would invest  18,850  in EPC Groupe on November 28, 2024 and sell it today you would earn a total of  1,450  from holding EPC Groupe or generate 7.69% return on investment over 90 days.

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

EPC Groupe  vs.  ZCCM Investments Holdings

EPC Groupe

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EPC Groupe are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EPC Groupe may actually be approaching a critical reversion point that can send shares even higher in March 2025.

ZCCM Investments Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZCCM Investments Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with EPC Groupe and ZCCM Investments

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

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.