Correlation Between Whitestone and Zimplats Holdings

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

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

Diversification Opportunities for Whitestone and Zimplats Holdings

0.01

Correlation Coefficient

Whitestone  Zimplats Holdings

Significant diversification

The 3 months correlation between Whitestone and Zimplats is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Whitestone Group and Zimplats Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimplats Holdings and Whitestone 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 Whitestone Group 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 Whitestone i.e., Whitestone and Zimplats Holdings go up and down completely randomly.

Pair Corralation between Whitestone and Zimplats Holdings

Assuming the 90 days trading horizon Whitestone Group is expected to generate 0.39 times more return on investment than Zimplats Holdings. However, Whitestone Group is 2.56 times less risky than Zimplats Holdings. It trades about 0.06 of its potential returns per unit of risk. Zimplats Holdings Limited is currently generating about -0.03 per unit of risk. If you would invest  1,220  in Whitestone Group on September 15, 2024 and sell it today you would earn a total of  60.00  from holding Whitestone Group or generate 4.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Whitestone Group  vs.  Zimplats Holdings Limited

Whitestone Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Whitestone is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail 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 Whitestone and Zimplats Holdings

The main advantage of trading using opposite Whitestone and Zimplats Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitestone 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 Whitestone Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.