Correlation Between ZCCM Investments and Entech SE

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

Diversification Opportunities for ZCCM Investments and Entech SE

-0.73

Correlation Coefficient

ZCCM Investments  Entech SE

Pay attention - limited upside

The 3 months correlation between ZCCM and Entech is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ZCCM Investments Holdings and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS 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 Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of ZCCM Investments i.e., ZCCM Investments and Entech SE go up and down completely randomly.

Pair Corralation between ZCCM Investments and Entech SE

Assuming the 90 days trading horizon ZCCM Investments Holdings is expected to under-perform the Entech SE. But the stock apears to be less risky and, when comparing its historical volatility, ZCCM Investments Holdings is 1.59 times less risky than Entech SE. The stock trades about -0.14 of its potential returns per unit of risk. The Entech SE SAS is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  506.00  in Entech SE SAS on October 7, 2024 and sell it today you would earn a total of  94.00  from holding Entech SE SAS or generate 18.58% return on investment over 90 days.

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

ZCCM Investments Holdings  vs.  Entech SE SAS

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.

Entech SE SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entech SE SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Entech SE is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ZCCM Investments and Entech SE

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

The idea behind ZCCM Investments Holdings and Entech SE SAS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.