Correlation Between ZJK Industrial and Eagle Materials

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

Diversification Opportunities for ZJK Industrial and Eagle Materials

0.81

Correlation Coefficient

ZJK Industrial  Eagle Materials

Very poor diversification

The 3 months correlation between ZJK and Eagle is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ZJK Industrial Co, and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of ZJK Industrial i.e., ZJK Industrial and Eagle Materials go up and down completely randomly.

Pair Corralation between ZJK Industrial and Eagle Materials

Considering the 90-day investment horizon ZJK Industrial Co, is expected to under-perform the Eagle Materials. In addition to that, ZJK Industrial is 4.46 times more volatile than Eagle Materials. It trades about -0.08 of its total potential returns per unit of risk. Eagle Materials is currently generating about -0.08 per unit of volatility. If you would invest  25,162  in Eagle Materials on December 25, 2024 and sell it today you would lose (2,357) from holding Eagle Materials or give up 9.37% of portfolio value over 90 days.

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

ZJK Industrial Co,  vs.  Eagle Materials

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 conflicting 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.

Eagle Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ZJK Industrial and Eagle Materials

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

The idea behind ZJK Industrial Co, and Eagle Materials 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.