Correlation Between RESAAS Services and ZOO Digital

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

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

Diversification Opportunities for RESAAS Services and ZOO Digital

-0.56

Correlation Coefficient

RESAAS Services  ZOO Digital

Excellent diversification

The 3 months correlation between RESAAS and ZOO is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding RESAAS Services and ZOO Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOO Digital Group and RESAAS Services 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 RESAAS Services are associated (or correlated) with ZOO Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOO Digital Group has no effect on the direction of RESAAS Services i.e., RESAAS Services and ZOO Digital go up and down completely randomly.

Pair Corralation between RESAAS Services and ZOO Digital

Assuming the 90 days horizon RESAAS Services is expected to generate 1.12 times more return on investment than ZOO Digital. However, RESAAS Services is 1.12 times more volatile than ZOO Digital Group. It trades about 0.19 of its potential returns per unit of risk. ZOO Digital Group is currently generating about -0.21 per unit of risk. If you would invest  14.00  in RESAAS Services on December 25, 2024 and sell it today you would earn a total of  16.00  from holding RESAAS Services or generate 114.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

RESAAS Services  vs.  ZOO Digital Group

RESAAS Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RESAAS Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, RESAAS Services reported solid returns over the last few months and may actually be approaching a breakup point.

ZOO Digital Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZOO Digital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RESAAS Services and ZOO Digital

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

The idea behind RESAAS Services and ZOO Digital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.