Correlation Between SCHMID Group and ZOOZ Power

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

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

Diversification Opportunities for SCHMID Group and ZOOZ Power

0.32

Correlation Coefficient

SCHMID Group  ZOOZ Power

Weak diversification

The 3 months correlation between SCHMID and ZOOZ is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SCHMID Group NV and ZOOZ Power Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOOZ Power and SCHMID Group 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 SCHMID Group NV are associated (or correlated) with ZOOZ Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOOZ Power has no effect on the direction of SCHMID Group i.e., SCHMID Group and ZOOZ Power go up and down completely randomly.

Pair Corralation between SCHMID Group and ZOOZ Power

Assuming the 90 days horizon SCHMID Group NV is expected to under-perform the ZOOZ Power. In addition to that, SCHMID Group is 3.6 times more volatile than ZOOZ Power Ltd. It trades about -0.19 of its total potential returns per unit of risk. ZOOZ Power Ltd is currently generating about -0.41 per unit of volatility. If you would invest  287.00  in ZOOZ Power Ltd on October 15, 2024 and sell it today you would lose (41.00) from holding ZOOZ Power Ltd or give up 14.29% of portfolio value over 90 days.

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

SCHMID Group NV  vs.  ZOOZ Power Ltd

SCHMID Group NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCHMID Group NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, SCHMID Group showed solid returns over the last few months and may actually be approaching a breakup point.

ZOOZ Power

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZOOZ Power Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, ZOOZ Power is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCHMID Group and ZOOZ Power

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

The idea behind SCHMID Group NV and ZOOZ Power Ltd 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.