Correlation Between ZCCM Investments and Aelis Farma

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

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

Diversification Opportunities for ZCCM Investments and Aelis Farma

-0.35

Correlation Coefficient

ZCCM Investments  Aelis Farma

Very good diversification

The 3 months correlation between ZCCM and Aelis is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ZCCM Investments Holdings and Aelis Farma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aelis Farma SA and ZCCM Investments 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 ZCCM Investments Holdings are associated (or correlated) with Aelis Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aelis Farma SA has no effect on the direction of ZCCM Investments i.e., ZCCM Investments and Aelis Farma go up and down completely randomly.

Pair Corralation between ZCCM Investments and Aelis Farma

Assuming the 90 days trading horizon ZCCM Investments Holdings is expected to generate 0.8 times more return on investment than Aelis Farma. However, ZCCM Investments Holdings is 1.25 times less risky than Aelis Farma. It trades about -0.01 of its potential returns per unit of risk. Aelis Farma SA is currently generating about -0.26 per unit of risk. If you would invest  140.00  in ZCCM Investments Holdings on September 13, 2024 and sell it today you would lose (6.00) from holding ZCCM Investments Holdings or give up 4.29% of portfolio value over 90 days.

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

ZCCM Investments Holdings  vs.  Aelis Farma SA

ZCCM Investments Holdings

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, ZCCM Investments is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Aelis Farma SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aelis Farma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ZCCM Investments and Aelis Farma

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

The idea behind ZCCM Investments Holdings and Aelis Farma SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.