Correlation Between ZENITH BANK and SECURE ELECTRONIC

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

By analyzing existing cross correlation between ZENITH BANK PLC and SECURE ELECTRONIC TECHNOLOGY, you can compare the effects of market volatilities on ZENITH BANK and SECURE ELECTRONIC 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 ZENITH BANK with a short position of SECURE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZENITH BANK and SECURE ELECTRONIC.

Diversification Opportunities for ZENITH BANK and SECURE ELECTRONIC

-0.34

Correlation Coefficient

ZENITH BANK  SECURE ELECTRONIC

Very good diversification

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

Pair Corralation between ZENITH BANK and SECURE ELECTRONIC

Assuming the 90 days trading horizon ZENITH BANK is expected to generate 1.12 times less return on investment than SECURE ELECTRONIC. But when comparing it to its historical volatility, ZENITH BANK PLC is 5.86 times less risky than SECURE ELECTRONIC. It trades about 0.3 of its potential returns per unit of risk. SECURE ELECTRONIC TECHNOLOGY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  56.00  in SECURE ELECTRONIC TECHNOLOGY on September 28, 2024 and sell it today you would earn a total of  2.00  from holding SECURE ELECTRONIC TECHNOLOGY or generate 3.57% return on investment over 90 days.

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

ZENITH BANK PLC  vs.  SECURE ELECTRONIC TECHNOLOGY

ZENITH BANK PLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZENITH BANK PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, ZENITH BANK sustained solid returns over the last few months and may actually be approaching a breakup point.

SECURE ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SECURE ELECTRONIC TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ZENITH BANK and SECURE ELECTRONIC

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

The idea behind ZENITH BANK PLC and SECURE ELECTRONIC TECHNOLOGY 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.