Correlation Between Metalla Royalty and Zimplats Holdings

Can any of the company-specific risk be diversified away by investing in both Metalla Royalty and Zimplats Holdings 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 Metalla Royalty and Zimplats Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metalla Royalty Streaming and Zimplats Holdings Limited, you can compare the effects of market volatilities on Metalla Royalty and Zimplats Holdings 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 Metalla Royalty with a short position of Zimplats Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalla Royalty and Zimplats Holdings.

Diversification Opportunities for Metalla Royalty and Zimplats Holdings

0.16

Correlation Coefficient

Metalla Royalty  Zimplats Holdings

Average diversification

The 3 months correlation between Metalla and Zimplats is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Metalla Royalty Streaming and Zimplats Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimplats Holdings and Metalla Royalty 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 Metalla Royalty Streaming are associated (or correlated) with Zimplats Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimplats Holdings has no effect on the direction of Metalla Royalty i.e., Metalla Royalty and Zimplats Holdings go up and down completely randomly.

Pair Corralation between Metalla Royalty and Zimplats Holdings

Considering the 90-day investment horizon Metalla Royalty Streaming is expected to under-perform the Zimplats Holdings. In addition to that, Metalla Royalty is 1.09 times more volatile than Zimplats Holdings Limited. It trades about -0.06 of its total potential returns per unit of risk. Zimplats Holdings Limited is currently generating about -0.01 per unit of volatility. If you would invest  956.00  in Zimplats Holdings Limited on October 4, 2024 and sell it today you would lose (44.00) from holding Zimplats Holdings Limited or give up 4.6% of portfolio value over 90 days.

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

Metalla Royalty Streaming  vs.  Zimplats Holdings Limited

Metalla Royalty Streaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalla Royalty Streaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Zimplats Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zimplats Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Zimplats Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Metalla Royalty and Zimplats Holdings

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

The idea behind Metalla Royalty Streaming and Zimplats Holdings Limited 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.