Correlation Between Zedcor Energy and Compass

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

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

Diversification Opportunities for Zedcor Energy and Compass

-0.32

Correlation Coefficient

Zedcor Energy  Compass

Very good diversification

The 3 months correlation between Zedcor and Compass is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Zedcor Energy and Compass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass and Zedcor Energy 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 Zedcor Energy are associated (or correlated) with Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass has no effect on the direction of Zedcor Energy i.e., Zedcor Energy and Compass go up and down completely randomly.

Pair Corralation between Zedcor Energy and Compass

Assuming the 90 days horizon Zedcor Energy is expected to generate 0.87 times more return on investment than Compass. However, Zedcor Energy is 1.15 times less risky than Compass. It trades about 0.18 of its potential returns per unit of risk. Compass is currently generating about 0.07 per unit of risk. If you would invest  436.00  in Zedcor Energy on August 26, 2025 and sell it today you would earn a total of  164.00  from holding Zedcor Energy or generate 37.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Zedcor Energy  vs.  Compass

Zedcor Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zedcor Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Zedcor Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Compass

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Compass are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Compass reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zedcor Energy and Compass

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

The idea behind Zedcor Energy and Compass 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.