Correlation Between ZIP and Catalyst Metals

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

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

Diversification Opportunities for ZIP and Catalyst Metals

-0.64

Correlation Coefficient

ZIP  Catalyst Metals

Excellent diversification

The 3 months correlation between ZIP and Catalyst is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ZIP Co and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and ZIP 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 ZIP Co are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of ZIP i.e., ZIP and Catalyst Metals go up and down completely randomly.

Pair Corralation between ZIP and Catalyst Metals

Assuming the 90 days trading horizon ZIP Co is expected to generate 1.04 times more return on investment than Catalyst Metals. However, ZIP is 1.04 times more volatile than Catalyst Metals. It trades about 0.28 of its potential returns per unit of risk. Catalyst Metals is currently generating about -0.1 per unit of risk. If you would invest  151.00  in ZIP Co on April 22, 2025 and sell it today you would earn a total of  154.00  from holding ZIP Co or generate 101.99% return on investment over 90 days.

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

ZIP Co  vs.  Catalyst Metals

ZIP Co

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZIP Co are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ZIP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Catalyst Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ZIP and Catalyst Metals

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

The idea behind ZIP Co and Catalyst Metals 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..