Correlation Between Zebra Technologies and Applied DNA

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

By analyzing existing cross correlation between Zebra Technologies and Applied DNA Sciences, you can compare the effects of market volatilities on Zebra Technologies and Applied DNA 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 Zebra Technologies with a short position of Applied DNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zebra Technologies and Applied DNA.

Diversification Opportunities for Zebra Technologies and Applied DNA

0.82

Correlation Coefficient

Zebra Technologies  Applied DNA

Very poor diversification

The 3 months correlation between Zebra and Applied is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Zebra Technologies and Applied DNA Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied DNA Sciences and Zebra Technologies 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 Zebra Technologies are associated (or correlated) with Applied DNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied DNA Sciences has no effect on the direction of Zebra Technologies i.e., Zebra Technologies and Applied DNA go up and down completely randomly.

Pair Corralation between Zebra Technologies and Applied DNA

Given the investment horizon of 90 days Zebra Technologies is expected to generate 0.21 times more return on investment than Applied DNA. However, Zebra Technologies is 4.68 times less risky than Applied DNA. It trades about -0.22 of its potential returns per unit of risk. Applied DNA Sciences is currently generating about -0.22 per unit of risk. If you would invest  38,385  in Zebra Technologies on December 29, 2024 and sell it today you would lose (9,871) from holding Zebra Technologies or give up 25.72% of portfolio value over 90 days.

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

Zebra Technologies  vs.  Applied DNA Sciences

Zebra Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zebra Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat 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.

Applied DNA Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied DNA Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Zebra Technologies and Applied DNA

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

The idea behind Zebra Technologies and Applied DNA Sciences 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.