Correlation Between Zinzino AB and Mendus AB

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

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

Diversification Opportunities for Zinzino AB and Mendus AB

0.5

Correlation Coefficient

Zinzino AB  Mendus AB

Very weak diversification

The 3 months correlation between Zinzino and Mendus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Zinzino AB Series and Mendus AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendus AB and Zinzino AB 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 Zinzino AB Series are associated (or correlated) with Mendus AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendus AB has no effect on the direction of Zinzino AB i.e., Zinzino AB and Mendus AB go up and down completely randomly.

Pair Corralation between Zinzino AB and Mendus AB

Assuming the 90 days trading horizon Zinzino AB Series is expected to generate 0.64 times more return on investment than Mendus AB. However, Zinzino AB Series is 1.56 times less risky than Mendus AB. It trades about 0.07 of its potential returns per unit of risk. Mendus AB is currently generating about 0.04 per unit of risk. If you would invest  7,910  in Zinzino AB Series on September 7, 2024 and sell it today you would earn a total of  870.00  from holding Zinzino AB Series or generate 11.0% return on investment over 90 days.

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

Zinzino AB Series  vs.  Mendus AB

Zinzino AB Series

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zinzino AB Series are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zinzino AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mendus AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mendus AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mendus AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zinzino AB and Mendus AB

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

The idea behind Zinzino AB Series and Mendus AB 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.