Correlation Between ZW Data and CMG Holdings

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

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

Diversification Opportunities for ZW Data and CMG Holdings

-0.07

Correlation Coefficient

ZW Data  CMG Holdings

Good diversification

The 3 months correlation between CNET and CMG is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ZW Data Action and CMG Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Holdings Group and ZW Data 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 ZW Data Action are associated (or correlated) with CMG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Holdings Group has no effect on the direction of ZW Data i.e., ZW Data and CMG Holdings go up and down completely randomly.

Pair Corralation between ZW Data and CMG Holdings

Given the investment horizon of 90 days ZW Data is expected to generate 13.31 times less return on investment than CMG Holdings. But when comparing it to its historical volatility, ZW Data Action is 1.14 times less risky than CMG Holdings. It trades about 0.01 of its potential returns per unit of risk. CMG Holdings Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.17  in CMG Holdings Group on September 3, 2024 and sell it today you would earn a total of  0.01  from holding CMG Holdings Group or generate 5.88% return on investment over 90 days.

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

ZW Data Action  vs.  CMG Holdings Group

ZW Data Action

Risk-Adjusted Performance

0 of 100

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 comparatively stable technical and fundamental indicators, ZW Data is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CMG Holdings Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CMG Holdings Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CMG Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZW Data and CMG Holdings

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

The idea behind ZW Data Action and CMG Holdings Group 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.