Correlation Between Cloud Live and A Zenith

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

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

Diversification Opportunities for Cloud Live and A Zenith

0.65

Correlation Coefficient

Cloud Live  A Zenith

Poor diversification

The 3 months correlation between Cloud and 603389 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Live Technology 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 Cloud Live 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 Cloud Live Technology are associated (or correlated) with A Zenith. 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 Cloud Live i.e., Cloud Live and A Zenith go up and down completely randomly.

Pair Corralation between Cloud Live and A Zenith

Assuming the 90 days trading horizon Cloud Live Technology is expected to under-perform the A Zenith. But the stock apears to be less risky and, when comparing its historical volatility, Cloud Live Technology is 1.26 times less risky than A Zenith. The stock trades about -0.01 of its potential returns per unit of risk. The A Zenith Home Furnishings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  572.00  in A Zenith Home Furnishings on October 23, 2024 and sell it today you would lose (34.00) from holding A Zenith Home Furnishings or give up 5.94% of portfolio value over 90 days.

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

Cloud Live Technology  vs.  A Zenith Home Furnishings

Cloud Live Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloud Live Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cloud Live is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

A Zenith Home

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cloud Live and A Zenith

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

The idea behind Cloud Live Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.