Correlation Between Data Storage and EZGO Technologies

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

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

Diversification Opportunities for Data Storage and EZGO Technologies

-0.51

Correlation Coefficient

Data Storage  EZGO Technologies

Excellent diversification

The 3 months correlation between Data and EZGO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Data Storage and EZGO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZGO Technologies and Data Storage 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 Data Storage are associated (or correlated) with EZGO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZGO Technologies has no effect on the direction of Data Storage i.e., Data Storage and EZGO Technologies go up and down completely randomly.

Pair Corralation between Data Storage and EZGO Technologies

Assuming the 90 days horizon Data Storage is expected to generate 2.31 times more return on investment than EZGO Technologies. However, Data Storage is 2.31 times more volatile than EZGO Technologies. It trades about 0.08 of its potential returns per unit of risk. EZGO Technologies is currently generating about -0.06 per unit of risk. If you would invest  55.00  in Data Storage on October 20, 2024 and sell it today you would earn a total of  8.00  from holding Data Storage or generate 14.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.27%
Values	Daily Returns

Data Storage  vs.  EZGO Technologies

Data Storage

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Data Storage showed solid returns over the last few months and may actually be approaching a breakup point.

EZGO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Data Storage and EZGO Technologies

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

The idea behind Data Storage and EZGO 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.