Correlation Between Zimplats Holdings and Exmar NV

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

Diversification Opportunities for Zimplats Holdings and Exmar NV

0.19

Correlation Coefficient

Zimplats Holdings  Exmar NV

Average diversification

The 3 months correlation between Zimplats and Exmar is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Exmar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exmar NV 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 Exmar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exmar NV has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Exmar NV go up and down completely randomly.

Pair Corralation between Zimplats Holdings and Exmar NV

Assuming the 90 days horizon Zimplats Holdings Limited is expected to under-perform the Exmar NV. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zimplats Holdings Limited is 1.23 times less risky than Exmar NV. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Exmar NV is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  871.00  in Exmar NV on September 15, 2024 and sell it today you would earn a total of  267.00  from holding Exmar NV or generate 30.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Zimplats Holdings Limited  vs.  Exmar NV

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Exmar NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exmar NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Exmar NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimplats Holdings and Exmar NV

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

The idea behind Zimplats Holdings Limited and Exmar NV 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.