Correlation Between ZIM Integrated and Toro

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

By analyzing existing cross correlation between ZIM Integrated Shipping and Toro, you can compare the effects of market volatilities on ZIM Integrated and Toro 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 ZIM Integrated with a short position of Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZIM Integrated and Toro.

Diversification Opportunities for ZIM Integrated and Toro

-0.16

Correlation Coefficient

ZIM Integrated  Toro

Good diversification

The 3 months correlation between ZIM and Toro is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ZIM Integrated Shipping and Toro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and ZIM Integrated 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 ZIM Integrated Shipping are associated (or correlated) with Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of ZIM Integrated i.e., ZIM Integrated and Toro go up and down completely randomly.

Pair Corralation between ZIM Integrated and Toro

Considering the 90-day investment horizon ZIM Integrated Shipping is expected to generate 1.52 times more return on investment than Toro. However, ZIM Integrated is 1.52 times more volatile than Toro. It trades about -0.05 of its potential returns per unit of risk. Toro is currently generating about -0.08 per unit of risk. If you would invest  1,786  in ZIM Integrated Shipping on December 26, 2024 and sell it today you would lose (239.00) from holding ZIM Integrated Shipping or give up 13.38% of portfolio value over 90 days.

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

ZIM Integrated Shipping  vs.  Toro

ZIM Integrated Shipping

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZIM Integrated Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Toro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toro 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 very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ZIM Integrated and Toro

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

The idea behind ZIM Integrated Shipping and Toro 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.