Correlation Between ZJK Industrial and Direct Line

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

By analyzing existing cross correlation between ZJK Industrial Co, and Direct Line Insurance, you can compare the effects of market volatilities on ZJK Industrial and Direct Line 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 ZJK Industrial with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZJK Industrial and Direct Line.

Diversification Opportunities for ZJK Industrial and Direct Line

-0.72

Correlation Coefficient

ZJK Industrial  Direct Line

Pay attention - limited upside

The 3 months correlation between ZJK and Direct is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ZJK Industrial Co, and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance and ZJK Industrial 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 ZJK Industrial Co, are associated (or correlated) with Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of ZJK Industrial i.e., ZJK Industrial and Direct Line go up and down completely randomly.

Pair Corralation between ZJK Industrial and Direct Line

Considering the 90-day investment horizon ZJK Industrial Co, is expected to under-perform the Direct Line. In addition to that, ZJK Industrial is 4.13 times more volatile than Direct Line Insurance. It trades about -0.05 of its total potential returns per unit of risk. Direct Line Insurance is currently generating about 0.14 per unit of volatility. If you would invest  1,218  in Direct Line Insurance on December 19, 2024 and sell it today you would earn a total of  195.00  from holding Direct Line Insurance or generate 16.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

ZJK Industrial Co,  vs.  Direct Line Insurance

ZJK Industrial Co,

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZJK Industrial Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Direct Line Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direct Line Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Direct Line showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZJK Industrial and Direct Line

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

The idea behind ZJK Industrial Co, and Direct Line Insurance 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.