Correlation Between ZKB Platinum and ZKB Gold

Can any of the company-specific risk be diversified away by investing in both ZKB Platinum and ZKB Gold 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 ZKB Platinum and ZKB Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZKB Platinum ETF and ZKB Gold ETF, you can compare the effects of market volatilities on ZKB Platinum and ZKB Gold 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 ZKB Platinum with a short position of ZKB Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKB Platinum and ZKB Gold.

Diversification Opportunities for ZKB Platinum and ZKB Gold

0.77

Correlation Coefficient

ZKB Platinum  ZKB Gold

Poor diversification

The 3 months correlation between ZKB and ZKB is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Platinum ETF and ZKB Gold ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Gold ETF and ZKB Platinum 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 ZKB Platinum ETF are associated (or correlated) with ZKB Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Gold ETF has no effect on the direction of ZKB Platinum i.e., ZKB Platinum and ZKB Gold go up and down completely randomly.

Pair Corralation between ZKB Platinum and ZKB Gold

Assuming the 90 days trading horizon ZKB Platinum is expected to generate 3.31 times less return on investment than ZKB Gold. In addition to that, ZKB Platinum is 1.79 times more volatile than ZKB Gold ETF. It trades about 0.02 of its total potential returns per unit of risk. ZKB Gold ETF is currently generating about 0.11 per unit of volatility. If you would invest  98,620  in ZKB Gold ETF on October 5, 2024 and sell it today you would earn a total of  34,320  from holding ZKB Gold ETF or generate 34.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.68%
Values	Daily Returns

ZKB Platinum ETF  vs.  ZKB Gold ETF

ZKB Platinum ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKB Platinum ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ZKB Platinum is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ZKB Gold ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKB Gold ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, ZKB Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ZKB Platinum and ZKB Gold

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

The idea behind ZKB Platinum ETF and ZKB Gold ETF 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.