Correlation Between Zinc One and Kavango Resources

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

By analyzing existing cross correlation between Zinc One Resources and Kavango Resources Plc, you can compare the effects of market volatilities on Zinc One and Kavango Resources 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 Zinc One with a short position of Kavango Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zinc One and Kavango Resources.

Diversification Opportunities for Zinc One and Kavango Resources

-0.49

Correlation Coefficient

Zinc One  Kavango Resources

Very good diversification

The 3 months correlation between Zinc and Kavango is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Zinc One Resources and Kavango Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kavango Resources Plc and Zinc One 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 Zinc One Resources are associated (or correlated) with Kavango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kavango Resources Plc has no effect on the direction of Zinc One i.e., Zinc One and Kavango Resources go up and down completely randomly.

Pair Corralation between Zinc One and Kavango Resources

Assuming the 90 days horizon Zinc One Resources is expected to generate 0.35 times more return on investment than Kavango Resources. However, Zinc One Resources is 2.82 times less risky than Kavango Resources. It trades about 0.13 of its potential returns per unit of risk. Kavango Resources Plc is currently generating about 0.0 per unit of risk. If you would invest  8.17  in Zinc One Resources on December 29, 2024 and sell it today you would earn a total of  1.06  from holding Zinc One Resources or generate 12.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Zinc One Resources  vs.  Kavango Resources Plc

Zinc One Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zinc One Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Zinc One reported solid returns over the last few months and may actually be approaching a breakup point.

Kavango Resources Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kavango Resources Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kavango Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zinc One and Kavango Resources

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

The idea behind Zinc One Resources and Kavango Resources Plc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.