Correlation Between ZEN Graphene and Brixton Metals

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

By analyzing existing cross correlation between ZEN Graphene Solutions and Brixton Metals, you can compare the effects of market volatilities on ZEN Graphene and Brixton Metals 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 ZEN Graphene with a short position of Brixton Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZEN Graphene and Brixton Metals.

Diversification Opportunities for ZEN Graphene and Brixton Metals

0.13

Correlation Coefficient

ZEN Graphene  Brixton Metals

Average diversification

The 3 months correlation between ZEN and Brixton is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ZEN Graphene Solutions and Brixton Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixton Metals and ZEN Graphene 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 ZEN Graphene Solutions are associated (or correlated) with Brixton Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixton Metals has no effect on the direction of ZEN Graphene i.e., ZEN Graphene and Brixton Metals go up and down completely randomly.

Pair Corralation between ZEN Graphene and Brixton Metals

Given the investment horizon of 90 days ZEN Graphene Solutions is expected to under-perform the Brixton Metals. But the stock apears to be less risky and, when comparing its historical volatility, ZEN Graphene Solutions is 1.09 times less risky than Brixton Metals. The stock trades about -0.07 of its potential returns per unit of risk. The Brixton Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.70  in Brixton Metals on November 28, 2024 and sell it today you would earn a total of  1.60  from holding Brixton Metals or generate 34.04% return on investment over 90 days.

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

ZEN Graphene Solutions  vs.  Brixton Metals

ZEN Graphene Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZEN Graphene Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Brixton Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brixton Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brixton Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZEN Graphene and Brixton Metals

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

The idea behind ZEN Graphene Solutions and Brixton Metals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.