Correlation Between Zurn Elkay and Aker Carbon

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Can any of the company-specific risk be diversified away by investing in both Zurn Elkay and Aker Carbon 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 Zurn Elkay and Aker Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zurn Elkay Water and Aker Carbon Capture, you can compare the effects of market volatilities on Zurn Elkay and Aker Carbon 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 Zurn Elkay with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurn Elkay and Aker Carbon.

Diversification Opportunities for Zurn Elkay and Aker Carbon

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Zurn and Aker is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and Zurn Elkay 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 Zurn Elkay Water are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Zurn Elkay i.e., Zurn Elkay and Aker Carbon go up and down completely randomly.

Pair Corralation between Zurn Elkay and Aker Carbon

Considering the 90-day investment horizon Zurn Elkay Water is expected to generate 0.44 times more return on investment than Aker Carbon. However, Zurn Elkay Water is 2.25 times less risky than Aker Carbon. It trades about 0.24 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about 0.03 per unit of risk. If you would invest  3,122  in Zurn Elkay Water on September 2, 2024 and sell it today you would earn a total of  860.00  from holding Zurn Elkay Water or generate 27.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Zurn Elkay Water  vs.  Aker Carbon Capture

 Performance 
       Timeline  
Zurn Elkay Water 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Zurn Elkay unveiled solid returns over the last few months and may actually be approaching a breakup point.
Aker Carbon Capture 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Aker Carbon Capture are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aker Carbon is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Zurn Elkay and Aker Carbon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zurn Elkay and Aker Carbon

The main advantage of trading using opposite Zurn Elkay and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurn Elkay position performs unexpectedly, Aker Carbon 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 Aker Carbon will offset losses from the drop in Aker Carbon's long position.
The idea behind Zurn Elkay Water and Aker Carbon Capture 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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