Correlation Between Wireless Telecom and Ezenia

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

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

Diversification Opportunities for Wireless Telecom and Ezenia

-0.57

Correlation Coefficient

Wireless Telecom  Ezenia

Excellent diversification

The 3 months correlation between Wireless and Ezenia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Wireless Telecom Group and Ezenia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ezenia Inc and Wireless Telecom 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 Wireless Telecom Group are associated (or correlated) with Ezenia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ezenia Inc has no effect on the direction of Wireless Telecom i.e., Wireless Telecom and Ezenia go up and down completely randomly.

Pair Corralation between Wireless Telecom and Ezenia

Considering the 90-day investment horizon Wireless Telecom is expected to generate 1.76 times less return on investment than Ezenia. In addition to that, Wireless Telecom is 3.19 times more volatile than Ezenia Inc. It trades about 0.05 of its total potential returns per unit of risk. Ezenia Inc is currently generating about 0.26 per unit of volatility. If you would invest  2.70  in Ezenia Inc on October 11, 2024 and sell it today you would earn a total of  0.10  from holding Ezenia Inc or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	11.81%
Values	Daily Returns

Wireless Telecom Group  vs.  Ezenia Inc

Wireless Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wireless Telecom Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Wireless Telecom is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ezenia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ezenia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Ezenia is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wireless Telecom and Ezenia

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

The idea behind Wireless Telecom Group and Ezenia 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 CEOs Directory module to screen CEOs from public companies around the world.