Correlation Between Perion Network and Zedge

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

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

Diversification Opportunities for Perion Network and Zedge

-0.62

Correlation Coefficient

Perion Network  Zedge

Excellent diversification

The 3 months correlation between Perion and Zedge is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc and Perion Network 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 Perion Network are associated (or correlated) with Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Perion Network i.e., Perion Network and Zedge go up and down completely randomly.

Pair Corralation between Perion Network and Zedge

Given the investment horizon of 90 days Perion Network is expected to under-perform the Zedge. But the stock apears to be less risky and, when comparing its historical volatility, Perion Network is 1.55 times less risky than Zedge. The stock trades about -0.05 of its potential returns per unit of risk. The Zedge Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  237.00  in Zedge Inc on October 4, 2024 and sell it today you would earn a total of  32.00  from holding Zedge Inc or generate 13.5% return on investment over 90 days.

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

Perion Network  vs.  Zedge Inc

Perion Network

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perion Network are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Perion Network may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Perion Network and Zedge

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

The idea behind Perion Network and Zedge 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.