Correlation Between Cayman Tung and Zero One

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

By analyzing existing cross correlation between Cayman Tung Ling and Zero One Technology, you can compare the effects of market volatilities on Cayman Tung and Zero One 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 Cayman Tung with a short position of Zero One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cayman Tung and Zero One.

Diversification Opportunities for Cayman Tung and Zero One

-0.58

Correlation Coefficient

Cayman Tung  Zero One

Excellent diversification

The 3 months correlation between Cayman and Zero is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cayman Tung Ling and Zero One Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zero One Technology and Cayman Tung 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 Cayman Tung Ling are associated (or correlated) with Zero One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zero One Technology has no effect on the direction of Cayman Tung i.e., Cayman Tung and Zero One go up and down completely randomly.

Pair Corralation between Cayman Tung and Zero One

Assuming the 90 days trading horizon Cayman Tung Ling is expected to generate 1.59 times more return on investment than Zero One. However, Cayman Tung is 1.59 times more volatile than Zero One Technology. It trades about 0.16 of its potential returns per unit of risk. Zero One Technology is currently generating about -0.23 per unit of risk. If you would invest  2,700  in Cayman Tung Ling on October 22, 2024 and sell it today you would earn a total of  300.00  from holding Cayman Tung Ling or generate 11.11% return on investment over 90 days.

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

Cayman Tung Ling  vs.  Zero One Technology

Cayman Tung Ling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cayman Tung Ling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Zero One Technology

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zero One Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zero One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cayman Tung and Zero One

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

The idea behind Cayman Tung Ling and Zero One Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.