Correlation Between Raytech Holding and Zedge

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

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

Diversification Opportunities for Raytech Holding and Zedge

0.01

Correlation Coefficient

Raytech Holding  Zedge

Significant diversification

The 3 months correlation between Raytech and Zedge is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc and Raytech Holding 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 Raytech Holding Limited 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 Raytech Holding i.e., Raytech Holding and Zedge go up and down completely randomly.

Pair Corralation between Raytech Holding and Zedge

Considering the 90-day investment horizon Raytech Holding Limited is expected to under-perform the Zedge. In addition to that, Raytech Holding is 1.56 times more volatile than Zedge Inc. It trades about -0.23 of its total potential returns per unit of risk. Zedge Inc is currently generating about -0.09 per unit of volatility. If you would invest  260.00  in Zedge Inc on December 4, 2024 and sell it today you would lose (16.00) from holding Zedge Inc or give up 6.15% of portfolio value over 90 days.

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

Raytech Holding Limited  vs.  Zedge Inc

Raytech Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zedge Inc

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, Zedge is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Raytech Holding and Zedge

The main advantage of trading using opposite Raytech Holding and Zedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytech Holding 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 Raytech Holding Limited 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.