Correlation Between Zimplats Holdings and Goliath Resources

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

Diversification Opportunities for Zimplats Holdings and Goliath Resources

-0.69

Correlation Coefficient

Zimplats Holdings  Goliath Resources

Excellent diversification

The 3 months correlation between Zimplats and Goliath is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Goliath Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goliath 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 Goliath Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goliath Resources has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Goliath Resources go up and down completely randomly.

Pair Corralation between Zimplats Holdings and Goliath Resources

Assuming the 90 days horizon Zimplats Holdings Limited is expected to under-perform the Goliath Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zimplats Holdings Limited is 4.63 times less risky than Goliath Resources. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Goliath Resources Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Goliath Resources Limited on December 30, 2024 and sell it today you would earn a total of  48.00  from holding Goliath Resources Limited or generate 68.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.71%
Values	Daily Returns

Zimplats Holdings Limited  vs.  Goliath Resources Limited

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 latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Goliath Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goliath Resources Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goliath Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimplats Holdings and Goliath Resources

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

The idea behind Zimplats Holdings Limited and Goliath Resources Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.