Correlation Between ZW Data and National CineMedia

Can any of the company-specific risk be diversified away by investing in both ZW Data and National CineMedia 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 National CineMedia 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 National CineMedia, you can compare the effects of market volatilities on ZW Data and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZW Data and National CineMedia.

Diversification Opportunities for ZW Data and National CineMedia

0.5

Correlation Coefficient

ZW Data  National CineMedia

Very weak diversification

The 3 months correlation between CNET and National is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ZW Data Action and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of ZW Data i.e., ZW Data and National CineMedia go up and down completely randomly.

Pair Corralation between ZW Data and National CineMedia

Given the investment horizon of 90 days ZW Data Action is expected to under-perform the National CineMedia. In addition to that, ZW Data is 1.27 times more volatile than National CineMedia. It trades about -0.06 of its total potential returns per unit of risk. National CineMedia is currently generating about -0.05 per unit of volatility. If you would invest  644.00  in National CineMedia on December 28, 2024 and sell it today you would lose (83.00) from holding National CineMedia or give up 12.89% of portfolio value over 90 days.

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

ZW Data Action  vs.  National CineMedia

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.

National CineMedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ZW Data and National CineMedia

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

The idea behind ZW Data Action and National CineMedia 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 Transaction History module to view history of all your transactions and understand their impact on performance.