Correlation Between Trio Tech and Zenvia

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

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

Diversification Opportunities for Trio Tech and Zenvia

-0.15

Correlation Coefficient

Trio Tech  Zenvia

Good diversification

The 3 months correlation between Trio and Zenvia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and Zenvia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenvia Inc and Trio Tech 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 Trio Tech International are associated (or correlated) with Zenvia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenvia Inc has no effect on the direction of Trio Tech i.e., Trio Tech and Zenvia go up and down completely randomly.

Pair Corralation between Trio Tech and Zenvia

Considering the 90-day investment horizon Trio Tech is expected to generate 3.28 times less return on investment than Zenvia. But when comparing it to its historical volatility, Trio Tech International is 2.76 times less risky than Zenvia. It trades about 0.04 of its potential returns per unit of risk. Zenvia Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Zenvia Inc on September 24, 2024 and sell it today you would earn a total of  44.00  from holding Zenvia Inc or generate 37.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Trio Tech International  vs.  Zenvia Inc

Trio Tech International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Tech International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Trio Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zenvia Inc

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Trio Tech and Zenvia

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

The idea behind Trio Tech International and Zenvia 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.