Correlation Between ZCCM Investments and Air France

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Can any of the company-specific risk be diversified away by investing in both ZCCM Investments and Air France 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 Air France 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 Air France KLM SA, you can compare the effects of market volatilities on ZCCM Investments and Air France 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 Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZCCM Investments and Air France.

Diversification Opportunities for ZCCM Investments and Air France

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between ZCCM and Air is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ZCCM Investments Holdings and Air France KLM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM 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 Air France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of ZCCM Investments i.e., ZCCM Investments and Air France go up and down completely randomly.

Pair Corralation between ZCCM Investments and Air France

Assuming the 90 days trading horizon ZCCM Investments Holdings is expected to generate 1.02 times more return on investment than Air France. However, ZCCM Investments is 1.02 times more volatile than Air France KLM SA. It trades about 0.02 of its potential returns per unit of risk. Air France KLM SA is currently generating about -0.12 per unit of risk. If you would invest  128.00  in ZCCM Investments Holdings on October 23, 2024 and sell it today you would earn a total of  2.00  from holding ZCCM Investments Holdings or generate 1.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ZCCM Investments Holdings  vs.  Air France KLM SA

 Performance 
       Timeline  
ZCCM Investments Holdings 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ZCCM Investments Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.
Air France KLM 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Air France KLM SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ZCCM Investments and Air France Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ZCCM Investments and Air France

The main advantage of trading using opposite ZCCM Investments and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZCCM Investments position performs unexpectedly, Air France 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 Air France will offset losses from the drop in Air France's long position.
The idea behind ZCCM Investments Holdings and Air France KLM 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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