Correlation Between Geo and Zedcor

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

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

Diversification Opportunities for Geo and Zedcor

0.9

Correlation Coefficient

Geo  Zedcor

Almost no diversification

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

Pair Corralation between Geo and Zedcor

Considering the 90-day investment horizon Geo is expected to generate 1.56 times less return on investment than Zedcor. In addition to that, Geo is 1.19 times more volatile than Zedcor Inc. It trades about 0.1 of its total potential returns per unit of risk. Zedcor Inc is currently generating about 0.19 per unit of volatility. 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

Geo Group  vs.  Zedcor Inc

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.

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.

Pair Trading with Geo and Zedcor

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

The idea behind Geo Group and Zedcor Inc 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.