Correlation Between ZINC MEDIA and VERBUND AG

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

By analyzing existing cross correlation between ZINC MEDIA GR and VERBUND AG, you can compare the effects of market volatilities on ZINC MEDIA and VERBUND AG 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 ZINC MEDIA with a short position of VERBUND AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZINC MEDIA and VERBUND AG.

Diversification Opportunities for ZINC MEDIA and VERBUND AG

0.33

Correlation Coefficient

ZINC MEDIA  VERBUND AG

Weak diversification

The 3 months correlation between ZINC and VERBUND is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ZINC MEDIA GR and VERBUND AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG and ZINC MEDIA 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 ZINC MEDIA GR are associated (or correlated) with VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG has no effect on the direction of ZINC MEDIA i.e., ZINC MEDIA and VERBUND AG go up and down completely randomly.

Pair Corralation between ZINC MEDIA and VERBUND AG

Assuming the 90 days trading horizon ZINC MEDIA GR is expected to generate 1.09 times more return on investment than VERBUND AG. However, ZINC MEDIA is 1.09 times more volatile than VERBUND AG. It trades about 0.17 of its potential returns per unit of risk. VERBUND AG is currently generating about -0.02 per unit of risk. If you would invest  57.00  in ZINC MEDIA GR on December 23, 2024 and sell it today you would earn a total of  13.00  from holding ZINC MEDIA GR or generate 22.81% return on investment over 90 days.

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

ZINC MEDIA GR  vs.  VERBUND AG

ZINC MEDIA GR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZINC MEDIA GR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ZINC MEDIA reported solid returns over the last few months and may actually be approaching a breakup point.

VERBUND AG

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ZINC MEDIA and VERBUND AG

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

The idea behind ZINC MEDIA GR and VERBUND AG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.