Correlation Between Zimplats Holdings and Keyware Technologies

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

Diversification Opportunities for Zimplats Holdings and Keyware Technologies

-0.48

Correlation Coefficient

Zimplats Holdings  Keyware Technologies

Very good diversification

The 3 months correlation between Zimplats and Keyware is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Keyware Technologies NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyware Technologies 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 Keyware Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyware Technologies has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Keyware Technologies go up and down completely randomly.

Pair Corralation between Zimplats Holdings and Keyware Technologies

Assuming the 90 days horizon Zimplats Holdings Limited is expected to generate 3.24 times more return on investment than Keyware Technologies. However, Zimplats Holdings is 3.24 times more volatile than Keyware Technologies NV. It trades about 0.13 of its potential returns per unit of risk. Keyware Technologies NV is currently generating about -0.04 per unit of risk. If you would invest  830.00  in Zimplats Holdings Limited on September 15, 2024 and sell it today you would earn a total of  82.00  from holding Zimplats Holdings Limited or generate 9.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Zimplats Holdings Limited  vs.  Keyware Technologies 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.

Keyware Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keyware Technologies NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Keyware Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zimplats Holdings and Keyware Technologies

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

The idea behind Zimplats Holdings Limited and Keyware Technologies 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 Transaction History module to view history of all your transactions and understand their impact on performance.