Correlation Between Smithson Investment and Zinc Media

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

By analyzing existing cross correlation between Smithson Investment Trust and Zinc Media Group, you can compare the effects of market volatilities on Smithson Investment and Zinc Media 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 Smithson Investment with a short position of Zinc Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Zinc Media.

Diversification Opportunities for Smithson Investment and Zinc Media

-0.82

Correlation Coefficient

Smithson Investment  Zinc Media

Pay attention - limited upside

The 3 months correlation between Smithson and Zinc is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Zinc Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc Media Group and Smithson Investment 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 Smithson Investment Trust are associated (or correlated) with Zinc Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc Media Group has no effect on the direction of Smithson Investment i.e., Smithson Investment and Zinc Media go up and down completely randomly.

Pair Corralation between Smithson Investment and Zinc Media

Assuming the 90 days trading horizon Smithson Investment Trust is expected to under-perform the Zinc Media. But the stock apears to be less risky and, when comparing its historical volatility, Smithson Investment Trust is 2.45 times less risky than Zinc Media. The stock trades about -0.23 of its potential returns per unit of risk. The Zinc Media Group is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  4,860  in Zinc Media Group on October 9, 2024 and sell it today you would earn a total of  790.00  from holding Zinc Media Group or generate 16.26% return on investment over 90 days.

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

Smithson Investment Trust  vs.  Zinc Media Group

Smithson Investment Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Smithson Investment Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Smithson Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Zinc Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinc Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Smithson Investment and Zinc Media

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

The idea behind Smithson Investment Trust and Zinc Media Group 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.