Correlation Between Zegona Communications and Baker Hughes

Can any of the company-specific risk be diversified away by investing in both Zegona Communications and Baker Hughes 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 Baker Hughes 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 Baker Hughes Co, you can compare the effects of market volatilities on Zegona Communications and Baker Hughes 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 Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Baker Hughes.

Diversification Opportunities for Zegona Communications and Baker Hughes

-0.61

Correlation Coefficient

Zegona Communications  Baker Hughes

Excellent diversification

The 3 months correlation between Zegona and Baker is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes 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 Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Zegona Communications i.e., Zegona Communications and Baker Hughes go up and down completely randomly.

Pair Corralation between Zegona Communications and Baker Hughes

Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 1.59 times more return on investment than Baker Hughes. However, Zegona Communications is 1.59 times more volatile than Baker Hughes Co. It trades about -0.03 of its potential returns per unit of risk. Baker Hughes Co is currently generating about -0.26 per unit of risk. If you would invest  32,200  in Zegona Communications Plc on September 24, 2024 and sell it today you would lose (600.00) from holding Zegona Communications Plc or give up 1.86% of portfolio value over 90 days.

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

Zegona Communications Plc  vs.  Baker Hughes Co

Zegona Communications Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zegona Communications Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Baker Hughes

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baker Hughes may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zegona Communications and Baker Hughes

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

The idea behind Zegona Communications Plc and Baker Hughes Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.