Correlation Between Zimplats Holdings and Condor Resources

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

Diversification Opportunities for Zimplats Holdings and Condor Resources

-0.04

Correlation Coefficient

Zimplats Holdings  Condor Resources

Good diversification

The 3 months correlation between Zimplats and Condor is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Condor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Resources 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 Condor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Resources has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Condor Resources go up and down completely randomly.

Pair Corralation between Zimplats Holdings and Condor Resources

Assuming the 90 days horizon Zimplats Holdings Limited is expected to under-perform the Condor Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zimplats Holdings Limited is 2.22 times less risky than Condor Resources. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Condor Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Condor Resources on November 29, 2024 and sell it today you would earn a total of  0.40  from holding Condor Resources or generate 4.44% return on investment over 90 days.

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

Zimplats Holdings Limited  vs.  Condor Resources

Zimplats Holdings

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Condor Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Condor Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Condor Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimplats Holdings and Condor Resources

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

The idea behind Zimplats Holdings Limited and Condor Resources 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.