Correlation Between Consolidated Water and ZEN Graphene

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

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

Diversification Opportunities for Consolidated Water and ZEN Graphene

-0.81

Correlation Coefficient

Consolidated Water  ZEN Graphene

Pay attention - limited upside

The 3 months correlation between Consolidated and ZEN is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Water Co and ZEN Graphene Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN Graphene Solutions and Consolidated Water 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 Consolidated Water Co are associated (or correlated) with ZEN Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN Graphene Solutions has no effect on the direction of Consolidated Water i.e., Consolidated Water and ZEN Graphene go up and down completely randomly.

Pair Corralation between Consolidated Water and ZEN Graphene

Given the investment horizon of 90 days Consolidated Water Co is expected to generate 0.45 times more return on investment than ZEN Graphene. However, Consolidated Water Co is 2.22 times less risky than ZEN Graphene. It trades about 0.25 of its potential returns per unit of risk. ZEN Graphene Solutions is currently generating about -0.27 per unit of risk. If you would invest  2,270  in Consolidated Water Co on May 7, 2025 and sell it today you would earn a total of  645.00  from holding Consolidated Water Co or generate 28.41% return on investment over 90 days.

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

Consolidated Water Co  vs.  ZEN Graphene Solutions

Consolidated Water

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Water Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Consolidated Water displayed solid returns over the last few months and may actually be approaching a breakup point.

ZEN Graphene Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZEN Graphene Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in September 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Consolidated Water and ZEN Graphene

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

The idea behind Consolidated Water Co and ZEN Graphene Solutions 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.