Correlation Between BIO Key and Zedcor

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

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

Diversification Opportunities for BIO Key and Zedcor

0.13

Correlation Coefficient

BIO Key  Zedcor

Average diversification

The 3 months correlation between BIO and Zedcor is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding BIO Key International and Zedcor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedcor Inc and BIO Key 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 BIO Key International are associated (or correlated) with Zedcor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedcor Inc has no effect on the direction of BIO Key i.e., BIO Key and Zedcor go up and down completely randomly.

Pair Corralation between BIO Key and Zedcor

Given the investment horizon of 90 days BIO Key is expected to generate 8.94 times less return on investment than Zedcor. In addition to that, BIO Key is 3.06 times more volatile than Zedcor Inc. It trades about 0.01 of its total potential returns per unit of risk. Zedcor Inc is currently generating about 0.19 per unit of volatility. If you would invest  77.00  in Zedcor Inc on September 24, 2024 and sell it today you would earn a total of  148.00  from holding Zedcor Inc or generate 192.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

BIO Key International  vs.  Zedcor Inc

BIO Key International

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BIO Key International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, BIO Key may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zedcor Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zedcor Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Zedcor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIO Key and Zedcor

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

The idea behind BIO Key International and Zedcor Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..