Correlation Between Allot Communications and ZIM Integrated

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

By analyzing existing cross correlation between Allot Communications and ZIM Integrated Shipping, you can compare the effects of market volatilities on Allot Communications and ZIM Integrated 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 Allot Communications with a short position of ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allot Communications and ZIM Integrated.

Diversification Opportunities for Allot Communications and ZIM Integrated

-0.84

Correlation Coefficient

Allot Communications  ZIM Integrated

Pay attention - limited upside

The 3 months correlation between Allot and ZIM is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Allot Communications and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping and Allot Communications 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 Allot Communications are associated (or correlated) with ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Allot Communications i.e., Allot Communications and ZIM Integrated go up and down completely randomly.

Pair Corralation between Allot Communications and ZIM Integrated

Given the investment horizon of 90 days Allot Communications is expected to generate 98.88 times less return on investment than ZIM Integrated. But when comparing it to its historical volatility, Allot Communications is 1.23 times less risky than ZIM Integrated. It trades about 0.0 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  978.00  in ZIM Integrated Shipping on January 26, 2024 and sell it today you would earn a total of  169.00  from holding ZIM Integrated Shipping or generate 17.28% return on investment over 90 days.

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

Allot Communications  vs.  ZIM Integrated Shipping

Allot Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allot Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Allot Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

ZIM Integrated Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZIM Integrated Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Allot Communications and ZIM Integrated

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

The idea behind Allot Communications and ZIM Integrated Shipping 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.