Correlation Between ZB FINANCIAL and ECONET WIRELESS

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

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

Diversification Opportunities for ZB FINANCIAL and ECONET WIRELESS

-0.34

Correlation Coefficient

ZB FINANCIAL  ECONET WIRELESS

Very good diversification

The 3 months correlation between ZBFH and ECONET is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ZB FINANCIAL HOLDINGS and ECONET WIRELESS HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECONET WIRELESS HOLDINGS and ZB FINANCIAL 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 ZB FINANCIAL HOLDINGS are associated (or correlated) with ECONET WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECONET WIRELESS HOLDINGS has no effect on the direction of ZB FINANCIAL i.e., ZB FINANCIAL and ECONET WIRELESS go up and down completely randomly.

Pair Corralation between ZB FINANCIAL and ECONET WIRELESS

Assuming the 90 days trading horizon ZB FINANCIAL HOLDINGS is expected to under-perform the ECONET WIRELESS. In addition to that, ZB FINANCIAL is 1.35 times more volatile than ECONET WIRELESS HOLDINGS. It trades about -0.1 of its total potential returns per unit of risk. ECONET WIRELESS HOLDINGS is currently generating about 0.08 per unit of volatility. If you would invest  34,095  in ECONET WIRELESS HOLDINGS on December 21, 2024 and sell it today you would earn a total of  5,823  from holding ECONET WIRELESS HOLDINGS or generate 17.08% return on investment over 90 days.

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

ZB FINANCIAL HOLDINGS  vs.  ECONET WIRELESS HOLDINGS

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 weak 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.

ECONET WIRELESS HOLDINGS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECONET WIRELESS HOLDINGS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, ECONET WIRELESS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZB FINANCIAL and ECONET WIRELESS

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

The idea behind ZB FINANCIAL HOLDINGS and ECONET WIRELESS 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..