Correlation Between ZK International and Alderon Iron

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

By analyzing existing cross correlation between ZK International Group and Alderon Iron Ore, you can compare the effects of market volatilities on ZK International and Alderon Iron 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 ZK International with a short position of Alderon Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZK International and Alderon Iron.

Diversification Opportunities for ZK International and Alderon Iron

0.0

Correlation Coefficient

ZK International  Alderon Iron

Pay attention - limited upside

The 3 months correlation between ZKIN and Alderon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ZK International Group and Alderon Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alderon Iron Ore and ZK International 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 ZK International Group are associated (or correlated) with Alderon Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alderon Iron Ore has no effect on the direction of ZK International i.e., ZK International and Alderon Iron go up and down completely randomly.

Pair Corralation between ZK International and Alderon Iron

If you would invest  0.00  in Alderon Iron Ore on March 28, 2024 and sell it today you would earn a total of  0.00  from holding Alderon Iron Ore or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.73%
Values	Daily Returns

ZK International Group  vs.  Alderon Iron Ore

ZK International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZK International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, ZK International is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Alderon Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ZK International and Alderon Iron

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

The idea behind ZK International Group and Alderon Iron Ore 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 Global Correlations module to find global opportunities by holding instruments from different markets.