Correlation Between Zip Co and Capital Financial

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

By analyzing existing cross correlation between Zip Co Limited and Capital Financial Gl, you can compare the effects of market volatilities on Zip Co and Capital Financial 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 Zip Co with a short position of Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zip Co and Capital Financial.

Diversification Opportunities for Zip Co and Capital Financial

0.0

Correlation Coefficient

Zip Co  Capital Financial

Pay attention - limited upside

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

Pair Corralation between Zip Co and Capital Financial

If you would invest  0.01  in Capital Financial Gl on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Capital Financial Gl or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Zip Co Limited  vs.  Capital Financial Gl

Zip Co Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zip Co Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Capital Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Financial Gl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Capital Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zip Co and Capital Financial

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

The idea behind Zip Co Limited and Capital Financial Gl 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.