Correlation Between Credo Technology and Zebra Technologies

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

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

Diversification Opportunities for Credo Technology and Zebra Technologies

0.03

Correlation Coefficient

Credo Technology  Zebra Technologies

Significant diversification

The 3 months correlation between Credo and Zebra is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Credo Technology Group and Zebra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zebra Technologies and Credo Technology 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 Credo Technology Group are associated (or correlated) with Zebra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zebra Technologies has no effect on the direction of Credo Technology i.e., Credo Technology and Zebra Technologies go up and down completely randomly.

Pair Corralation between Credo Technology and Zebra Technologies

Given the investment horizon of 90 days Credo Technology Group is expected to generate 4.42 times more return on investment than Zebra Technologies. However, Credo Technology is 4.42 times more volatile than Zebra Technologies. It trades about 0.05 of its potential returns per unit of risk. Zebra Technologies is currently generating about -0.21 per unit of risk. If you would invest  4,896  in Credo Technology Group on November 29, 2024 and sell it today you would earn a total of  359.00  from holding Credo Technology Group or generate 7.33% return on investment over 90 days.

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

Credo Technology Group  vs.  Zebra Technologies

Credo Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Credo Technology Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Credo Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Zebra Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zebra Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Credo Technology and Zebra Technologies

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

The idea behind Credo Technology Group and Zebra Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .