Correlation Between Zimplats Holdings and Triple Flag

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

Diversification Opportunities for Zimplats Holdings and Triple Flag

0.26

Correlation Coefficient

Zimplats Holdings  Triple Flag

Modest diversification

The 3 months correlation between Zimplats and Triple is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zimplats Holdings Limited and Triple Flag Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triple Flag Precious 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 Triple Flag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triple Flag Precious has no effect on the direction of Zimplats Holdings i.e., Zimplats Holdings and Triple Flag go up and down completely randomly.

Pair Corralation between Zimplats Holdings and Triple Flag

Assuming the 90 days horizon Zimplats Holdings Limited is expected to under-perform the Triple Flag. In addition to that, Zimplats Holdings is 1.86 times more volatile than Triple Flag Precious. It trades about -0.24 of its total potential returns per unit of risk. Triple Flag Precious is currently generating about -0.19 per unit of volatility. If you would invest  1,620  in Triple Flag Precious on October 15, 2024 and sell it today you would lose (74.00) from holding Triple Flag Precious or give up 4.57% 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.  Triple Flag Precious

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 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.

Triple Flag Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triple Flag Precious has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Triple Flag is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zimplats Holdings and Triple Flag

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

The idea behind Zimplats Holdings Limited and Triple Flag Precious 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.