Correlation Between Ziff Davis and IHS Holding

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

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

Diversification Opportunities for Ziff Davis and IHS Holding

-0.49

Correlation Coefficient

Ziff Davis  IHS Holding

Very good diversification

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

Pair Corralation between Ziff Davis and IHS Holding

Allowing for the 90-day total investment horizon Ziff Davis is expected to generate 0.45 times more return on investment than IHS Holding. However, Ziff Davis is 2.23 times less risky than IHS Holding. It trades about 0.07 of its potential returns per unit of risk. IHS Holding is currently generating about -0.15 per unit of risk. If you would invest  5,515  in Ziff Davis on March 10, 2024 and sell it today you would earn a total of  137.00  from holding Ziff Davis or generate 2.48% return on investment over 90 days.

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

Ziff Davis  vs.  IHS Holding

Ziff Davis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ziff Davis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

IHS Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IHS Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, IHS Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ziff Davis and IHS Holding

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

The idea behind Ziff Davis and IHS Holding 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.