Correlation Between Arbe Robotics and Zscaler

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

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

Diversification Opportunities for Arbe Robotics and Zscaler

-0.12

Correlation Coefficient

Arbe Robotics  Zscaler

Good diversification

The 3 months correlation between Arbe and Zscaler is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Arbe Robotics and Zscaler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zscaler and Arbe Robotics 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 Arbe Robotics are associated (or correlated) with Zscaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zscaler has no effect on the direction of Arbe Robotics i.e., Arbe Robotics and Zscaler go up and down completely randomly.

Pair Corralation between Arbe Robotics and Zscaler

Given the investment horizon of 90 days Arbe Robotics is expected to under-perform the Zscaler. In addition to that, Arbe Robotics is 1.96 times more volatile than Zscaler. It trades about -0.01 of its total potential returns per unit of risk. Zscaler is currently generating about 0.06 per unit of volatility. If you would invest  10,495  in Zscaler on December 27, 2024 and sell it today you would earn a total of  10,660  from holding Zscaler or generate 101.57% return on investment over 90 days.

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

Arbe Robotics  vs.  Zscaler

Arbe Robotics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Zscaler

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zscaler are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zscaler unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbe Robotics and Zscaler

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

The idea behind Arbe Robotics and Zscaler 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.