Correlation Between CMG Holdings and ZW Data

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

By analyzing existing cross correlation between CMG Holdings Group and ZW Data Action, you can compare the effects of market volatilities on CMG Holdings and ZW Data 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 CMG Holdings with a short position of ZW Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Holdings and ZW Data.

Diversification Opportunities for CMG Holdings and ZW Data

0.25

Correlation Coefficient

CMG Holdings  ZW Data

Modest diversification

The 3 months correlation between CMG and CNET is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CMG Holdings Group and ZW Data Action in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZW Data Action and CMG Holdings 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 CMG Holdings Group are associated (or correlated) with ZW Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZW Data Action has no effect on the direction of CMG Holdings i.e., CMG Holdings and ZW Data go up and down completely randomly.

Pair Corralation between CMG Holdings and ZW Data

Given the investment horizon of 90 days CMG Holdings Group is expected to generate 2.7 times more return on investment than ZW Data. However, CMG Holdings is 2.7 times more volatile than ZW Data Action. It trades about 0.01 of its potential returns per unit of risk. ZW Data Action is currently generating about -0.05 per unit of risk. If you would invest  0.18  in CMG Holdings Group on December 26, 2024 and sell it today you would lose (0.05) from holding CMG Holdings Group or give up 27.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

CMG Holdings Group  vs.  ZW Data Action

CMG Holdings Group

Risk-Adjusted Performance

Weak

Over the last 90 days CMG Holdings Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating technical and fundamental indicators, CMG Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ZW Data Action

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZW Data Action has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CMG Holdings and ZW Data

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

The idea behind CMG Holdings Group and ZW Data Action 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.