Correlation Between RYANAIR HLDGS and ZIM Integrated

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

By analyzing existing cross correlation between RYANAIR HLDGS ADR and ZIM Integrated Shipping, you can compare the effects of market volatilities on RYANAIR HLDGS and ZIM Integrated 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 RYANAIR HLDGS with a short position of ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of RYANAIR HLDGS and ZIM Integrated.

Diversification Opportunities for RYANAIR HLDGS and ZIM Integrated

-0.08

Correlation Coefficient

RYANAIR HLDGS  ZIM Integrated

Good diversification

The 3 months correlation between RYANAIR and ZIM is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding RYANAIR HLDGS ADR and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping and RYANAIR HLDGS 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 RYANAIR HLDGS ADR are associated (or correlated) with ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of RYANAIR HLDGS i.e., RYANAIR HLDGS and ZIM Integrated go up and down completely randomly.

Pair Corralation between RYANAIR HLDGS and ZIM Integrated

Assuming the 90 days trading horizon RYANAIR HLDGS ADR is expected to generate 0.43 times more return on investment than ZIM Integrated. However, RYANAIR HLDGS ADR is 2.33 times less risky than ZIM Integrated. It trades about 0.02 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about -0.02 per unit of risk. If you would invest  4,234  in RYANAIR HLDGS ADR on December 21, 2024 and sell it today you would earn a total of  66.00  from holding RYANAIR HLDGS ADR or generate 1.56% return on investment over 90 days.

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

RYANAIR HLDGS ADR  vs.  ZIM Integrated Shipping

RYANAIR HLDGS ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RYANAIR HLDGS ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RYANAIR HLDGS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ZIM Integrated Shipping

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZIM Integrated Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with RYANAIR HLDGS and ZIM Integrated

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

The idea behind RYANAIR HLDGS ADR and ZIM Integrated Shipping 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.