Correlation Between ZF Commercial and Popular Vehicles

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

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

Diversification Opportunities for ZF Commercial and Popular Vehicles

0.51

Correlation Coefficient

ZF Commercial  Popular Vehicles

Very weak diversification

The 3 months correlation between ZFCVINDIA and Popular is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ZF Commercial Vehicle and Popular Vehicles and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular Vehicles and ZF Commercial 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 ZF Commercial Vehicle are associated (or correlated) with Popular Vehicles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular Vehicles has no effect on the direction of ZF Commercial i.e., ZF Commercial and Popular Vehicles go up and down completely randomly.

Pair Corralation between ZF Commercial and Popular Vehicles

Assuming the 90 days trading horizon ZF Commercial is expected to generate 2.96 times less return on investment than Popular Vehicles. But when comparing it to its historical volatility, ZF Commercial Vehicle is 1.33 times less risky than Popular Vehicles. It trades about 0.07 of its potential returns per unit of risk. Popular Vehicles and is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  9,924  in Popular Vehicles and on April 23, 2025 and sell it today you would earn a total of  3,261  from holding Popular Vehicles and or generate 32.86% return on investment over 90 days.

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

ZF Commercial Vehicle  vs.  Popular Vehicles and

ZF Commercial Vehicle

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZF Commercial Vehicle are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, ZF Commercial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Popular Vehicles

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Popular Vehicles and are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Popular Vehicles unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZF Commercial and Popular Vehicles

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

The idea behind ZF Commercial Vehicle and Popular Vehicles and 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.