Correlation Between ZCCM Investments and Neotion SA

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

Diversification Opportunities for ZCCM Investments and Neotion SA

0.43

Correlation Coefficient

ZCCM Investments  Neotion SA

Very weak diversification

The 3 months correlation between ZCCM and Neotion is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ZCCM Investments Holdings and Neotion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neotion 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 Neotion SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neotion SA has no effect on the direction of ZCCM Investments i.e., ZCCM Investments and Neotion SA go up and down completely randomly.

Pair Corralation between ZCCM Investments and Neotion SA

Assuming the 90 days trading horizon ZCCM Investments Holdings is expected to generate 0.53 times more return on investment than Neotion SA. However, ZCCM Investments Holdings is 1.88 times less risky than Neotion SA. It trades about 0.03 of its potential returns per unit of risk. Neotion SA is currently generating about -0.01 per unit of risk. If you would invest  111.00  in ZCCM Investments Holdings on October 5, 2024 and sell it today you would earn a total of  17.00  from holding ZCCM Investments Holdings or generate 15.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.08%
Values	Daily Returns

ZCCM Investments Holdings  vs.  Neotion 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.

Neotion SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neotion SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Neotion SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZCCM Investments and Neotion SA

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

The idea behind ZCCM Investments Holdings and Neotion 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.