Correlation Between Zedcor and Geo

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

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

Diversification Opportunities for Zedcor and Geo

0.9

Correlation Coefficient

Zedcor  Geo

Almost no diversification

The 3 months correlation between Zedcor and Geo is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Zedcor Inc and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group and Zedcor 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 Zedcor Inc are associated (or correlated) with Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of Zedcor i.e., Zedcor and Geo go up and down completely randomly.

Pair Corralation between Zedcor and Geo

Assuming the 90 days horizon Zedcor Inc is expected to generate 0.84 times more return on investment than Geo. However, Zedcor Inc is 1.19 times less risky than Geo. It trades about 0.19 of its potential returns per unit of risk. Geo Group is currently generating about 0.1 per unit of risk. 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	Very Strong
Accuracy	99.4%
Values	Daily Returns

Zedcor Inc  vs.  Geo Group

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.

Geo Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Geo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zedcor and Geo

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

The idea behind Zedcor Inc and Geo 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.