Correlation Between S P and Zodiac Clothing

Can any of the company-specific risk be diversified away by investing in both S P and Zodiac Clothing 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 S P and Zodiac Clothing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S P Apparels and Zodiac Clothing, you can compare the effects of market volatilities on S P and Zodiac Clothing 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 S P with a short position of Zodiac Clothing. Check out your portfolio center. Please also check ongoing floating volatility patterns of S P and Zodiac Clothing.

Diversification Opportunities for S P and Zodiac Clothing

0.59

Correlation Coefficient

S P  Zodiac Clothing

Very weak diversification

The 3 months correlation between SPAL and Zodiac is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding S P Apparels and Zodiac Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zodiac Clothing and S P 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 S P Apparels are associated (or correlated) with Zodiac Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zodiac Clothing has no effect on the direction of S P i.e., S P and Zodiac Clothing go up and down completely randomly.

Pair Corralation between S P and Zodiac Clothing

Assuming the 90 days trading horizon S P is expected to generate 1.18 times less return on investment than Zodiac Clothing. But when comparing it to its historical volatility, S P Apparels is 1.1 times less risky than Zodiac Clothing. It trades about 0.06 of its potential returns per unit of risk. Zodiac Clothing is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,835  in Zodiac Clothing on April 21, 2025 and sell it today you would earn a total of  1,123  from holding Zodiac Clothing or generate 11.42% return on investment over 90 days.

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

S P Apparels  vs.  Zodiac Clothing

S P Apparels

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in S P Apparels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, S P may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Zodiac Clothing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zodiac Clothing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Zodiac Clothing disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with S P and Zodiac Clothing

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

The idea behind S P Apparels and Zodiac Clothing 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .