Correlation Between TANGANDA TEA and ZB FINANCIAL

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

By analyzing existing cross correlation between TANGANDA TEA PANY and ZB FINANCIAL HOLDINGS, you can compare the effects of market volatilities on TANGANDA TEA and ZB FINANCIAL 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 TANGANDA TEA with a short position of ZB FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TANGANDA TEA and ZB FINANCIAL.

Diversification Opportunities for TANGANDA TEA and ZB FINANCIAL

0.9

Correlation Coefficient

TANGANDA TEA  ZB FINANCIAL

Almost no diversification

The 3 months correlation between TANGANDA and ZBFH is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding TANGANDA TEA PANY and ZB FINANCIAL HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZB FINANCIAL HOLDINGS and TANGANDA TEA 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 TANGANDA TEA PANY are associated (or correlated) with ZB FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZB FINANCIAL HOLDINGS has no effect on the direction of TANGANDA TEA i.e., TANGANDA TEA and ZB FINANCIAL go up and down completely randomly.

Pair Corralation between TANGANDA TEA and ZB FINANCIAL

Assuming the 90 days trading horizon TANGANDA TEA PANY is expected to under-perform the ZB FINANCIAL. In addition to that, TANGANDA TEA is 1.04 times more volatile than ZB FINANCIAL HOLDINGS. It trades about -0.28 of its total potential returns per unit of risk. ZB FINANCIAL HOLDINGS is currently generating about -0.1 per unit of volatility. If you would invest  66,500  in ZB FINANCIAL HOLDINGS on December 23, 2024 and sell it today you would lose (23,082) from holding ZB FINANCIAL HOLDINGS or give up 34.71% of portfolio value over 90 days.

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

TANGANDA TEA PANY  vs.  ZB FINANCIAL HOLDINGS

TANGANDA TEA PANY

Risk-Adjusted Performance

Very Weak

Over the last 90 days TANGANDA TEA PANY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ZB FINANCIAL HOLDINGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZB FINANCIAL HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TANGANDA TEA and ZB FINANCIAL

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

The idea behind TANGANDA TEA PANY and ZB FINANCIAL HOLDINGS 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.