Correlation Between Zimplats Holdings and Brightrock Gold

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

By analyzing existing cross correlation between Zimplats Holdings Limited and Brightrock Gold Corp, you can compare the effects of market volatilities on Zimplats Holdings and Brightrock Gold 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 Zimplats Holdings with a short position of Brightrock Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimplats Holdings and Brightrock Gold.

Diversification Opportunities for Zimplats Holdings and Brightrock Gold

0.54

Correlation Coefficient

Zimplats Holdings  Brightrock Gold

Very weak diversification

The 3 months correlation between Zimplats and Brightrock is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Brightrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightrock Gold Corp and Zimplats Holdings 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 Zimplats Holdings Limited are associated (or correlated) with Brightrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightrock Gold Corp has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Brightrock Gold go up and down completely randomly.

Pair Corralation between Zimplats Holdings and Brightrock Gold

Assuming the 90 days horizon Zimplats Holdings Limited is expected to under-perform the Brightrock Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zimplats Holdings Limited is 2.86 times less risky than Brightrock Gold. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Brightrock Gold Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Brightrock Gold Corp on September 26, 2024 and sell it today you would lose (24.20) from holding Brightrock Gold Corp or give up 75.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Zimplats Holdings Limited  vs.  Brightrock Gold Corp

Zimplats Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zimplats Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Zimplats Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Brightrock Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightrock Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Zimplats Holdings and Brightrock Gold

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

The idea behind Zimplats Holdings Limited and Brightrock Gold Corp 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 CEOs Directory module to screen CEOs from public companies around the world.