Correlation Between ZB FINANCIAL and TANGANDA TEA

Can any of the company-specific risk be diversified away by investing in both ZB FINANCIAL and TANGANDA TEA 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 TANGANDA TEA 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 TANGANDA TEA PANY, you can compare the effects of market volatilities on ZB FINANCIAL and TANGANDA TEA 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 TANGANDA TEA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZB FINANCIAL and TANGANDA TEA.

Diversification Opportunities for ZB FINANCIAL and TANGANDA TEA

0.9

Correlation Coefficient

ZB FINANCIAL  TANGANDA TEA

Almost no diversification

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

Pair Corralation between ZB FINANCIAL and TANGANDA TEA

Assuming the 90 days trading horizon ZB FINANCIAL HOLDINGS is expected to generate 0.96 times more return on investment than TANGANDA TEA. However, ZB FINANCIAL HOLDINGS is 1.04 times less risky than TANGANDA TEA. It trades about -0.1 of its potential returns per unit of risk. TANGANDA TEA PANY is currently generating about -0.28 per unit of risk. 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

ZB FINANCIAL HOLDINGS  vs.  TANGANDA TEA PANY

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.

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.

Pair Trading with ZB FINANCIAL and TANGANDA TEA

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

The idea behind ZB FINANCIAL HOLDINGS and TANGANDA TEA PANY 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.