Correlation Between ZCCM Investments and Charwood Energy

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

Diversification Opportunities for ZCCM Investments and Charwood Energy

-0.55

Correlation Coefficient

ZCCM Investments  Charwood Energy

Excellent diversification

The 3 months correlation between ZCCM and Charwood is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ZCCM Investments Holdings and Charwood Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charwood Energy 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 Charwood Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charwood Energy SA has no effect on the direction of ZCCM Investments i.e., ZCCM Investments and Charwood Energy go up and down completely randomly.

Pair Corralation between ZCCM Investments and Charwood Energy

Assuming the 90 days trading horizon ZCCM Investments Holdings is expected to under-perform the Charwood Energy. But the stock apears to be less risky and, when comparing its historical volatility, ZCCM Investments Holdings is 1.87 times less risky than Charwood Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Charwood Energy SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Charwood Energy SA on December 23, 2024 and sell it today you would earn a total of  90.00  from holding Charwood Energy SA or generate 35.43% return on investment over 90 days.

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

ZCCM Investments Holdings  vs.  Charwood Energy SA

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Charwood Energy SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charwood Energy SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Charwood Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZCCM Investments and Charwood Energy

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

The idea behind ZCCM Investments Holdings and Charwood Energy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.