Correlation Between ZIM Integrated and Allot Communications

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

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

Diversification Opportunities for ZIM Integrated and Allot Communications

-0.84

Correlation Coefficient

ZIM Integrated  Allot Communications

Pay attention - limited upside

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

Pair Corralation between ZIM Integrated and Allot Communications

Considering the 90-day investment horizon ZIM Integrated Shipping is expected to generate 1.23 times more return on investment than Allot Communications. However, ZIM Integrated is 1.23 times more volatile than Allot Communications. It trades about 0.2 of its potential returns per unit of risk. Allot Communications is currently generating about 0.0 per unit of risk. 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

ZIM Integrated Shipping  vs.  Allot Communications

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.

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.

Pair Trading with ZIM Integrated and Allot Communications

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

The idea behind ZIM Integrated Shipping and Allot Communications 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.