Correlation Between Zegona Communications and Thyssenkrupp

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

By analyzing existing cross correlation between Zegona Communications Plc and Thyssenkrupp AG ON, you can compare the effects of market volatilities on Zegona Communications and Thyssenkrupp 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 Zegona Communications with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Thyssenkrupp.

Diversification Opportunities for Zegona Communications and Thyssenkrupp

0.0

Correlation Coefficient

Zegona Communications  Thyssenkrupp

Pay attention - limited upside

The 3 months correlation between Zegona and Thyssenkrupp is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Thyssenkrupp AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ON and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ON has no effect on the direction of Zegona Communications i.e., Zegona Communications and Thyssenkrupp go up and down completely randomly.

Pair Corralation between Zegona Communications and Thyssenkrupp

If you would invest  35,200  in Zegona Communications Plc on December 2, 2024 and sell it today you would earn a total of  21,300  from holding Zegona Communications Plc or generate 60.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Zegona Communications Plc  vs.  Thyssenkrupp AG ON

Zegona Communications Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zegona Communications Plc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Zegona Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Thyssenkrupp AG ON

Risk-Adjusted Performance

Strong

Over the last 90 days Thyssenkrupp AG ON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Thyssenkrupp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zegona Communications and Thyssenkrupp

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

The idea behind Zegona Communications Plc and Thyssenkrupp AG ON 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.