Correlation Between Zimplats Holdings and Silver Scott

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

Diversification Opportunities for Zimplats Holdings and Silver Scott

0.3

Correlation Coefficient

Zimplats Holdings  Silver Scott

Weak diversification

The 3 months correlation between Zimplats and Silver is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Silver Scott Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Scott Mines 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 Silver Scott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Scott Mines has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Silver Scott go up and down completely randomly.

Pair Corralation between Zimplats Holdings and Silver Scott

Assuming the 90 days horizon Zimplats Holdings Limited is expected to under-perform the Silver Scott. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zimplats Holdings Limited is 9.76 times less risky than Silver Scott. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Silver Scott Mines is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.02  in Silver Scott Mines on September 30, 2024 and sell it today you would lose (2.02) from holding Silver Scott Mines or give up 50.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Zimplats Holdings Limited  vs.  Silver Scott Mines

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.

Silver Scott Mines

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Scott Mines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Silver Scott unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimplats Holdings and Silver Scott

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

The idea behind Zimplats Holdings Limited and Silver Scott Mines 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.