Correlation Between De Rucci and A-Zenith Home

Can any of the company-specific risk be diversified away by investing in both De Rucci and A-Zenith Home 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 De Rucci and A-Zenith Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between De Rucci Healthy and A Zenith Home Furnishings, you can compare the effects of market volatilities on De Rucci and A-Zenith Home 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 De Rucci with a short position of A-Zenith Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Rucci and A-Zenith Home.

Diversification Opportunities for De Rucci and A-Zenith Home

0.4

Correlation Coefficient

De Rucci  A-Zenith Home

Very weak diversification

The 3 months correlation between 001323 and A-Zenith is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding De Rucci Healthy and A Zenith Home Furnishings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Zenith Home and De Rucci 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 De Rucci Healthy are associated (or correlated) with A-Zenith Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Zenith Home has no effect on the direction of De Rucci i.e., De Rucci and A-Zenith Home go up and down completely randomly.

Pair Corralation between De Rucci and A-Zenith Home

Assuming the 90 days trading horizon De Rucci Healthy is expected to generate 0.52 times more return on investment than A-Zenith Home. However, De Rucci Healthy is 1.94 times less risky than A-Zenith Home. It trades about -0.08 of its potential returns per unit of risk. A Zenith Home Furnishings is currently generating about -0.09 per unit of risk. If you would invest  3,662  in De Rucci Healthy on December 24, 2024 and sell it today you would lose (320.00) from holding De Rucci Healthy or give up 8.74% of portfolio value over 90 days.

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

De Rucci Healthy  vs.  A Zenith Home Furnishings

De Rucci Healthy

Risk-Adjusted Performance

Very Weak

Over the last 90 days De Rucci Healthy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

A Zenith Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days A Zenith Home Furnishings 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with De Rucci and A-Zenith Home

The main advantage of trading using opposite De Rucci and A-Zenith Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Rucci position performs unexpectedly, A-Zenith Home 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 A-Zenith Home will offset losses from the drop in A-Zenith Home's long position.

The idea behind De Rucci Healthy and A Zenith Home Furnishings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.