Correlation Between Ziff Davis and CyberAgent

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

By analyzing existing cross correlation between Ziff Davis and CyberAgent ADR, you can compare the effects of market volatilities on Ziff Davis and CyberAgent 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 Ziff Davis with a short position of CyberAgent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ziff Davis and CyberAgent.

Diversification Opportunities for Ziff Davis and CyberAgent

-0.43

Correlation Coefficient

Ziff Davis  CyberAgent

Very good diversification

The 3 months correlation between Ziff and CyberAgent is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis and CyberAgent ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent ADR and Ziff Davis 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 Ziff Davis are associated (or correlated) with CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent ADR has no effect on the direction of Ziff Davis i.e., Ziff Davis and CyberAgent go up and down completely randomly.

Pair Corralation between Ziff Davis and CyberAgent

Allowing for the 90-day total investment horizon Ziff Davis is expected to under-perform the CyberAgent. But the stock apears to be less risky and, when comparing its historical volatility, Ziff Davis is 2.21 times less risky than CyberAgent. The stock trades about -0.19 of its potential returns per unit of risk. The CyberAgent ADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  310.00  in CyberAgent ADR on December 20, 2024 and sell it today you would earn a total of  75.00  from holding CyberAgent ADR or generate 24.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Ziff Davis  vs.  CyberAgent ADR

Ziff Davis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ziff Davis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CyberAgent ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, CyberAgent showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ziff Davis and CyberAgent

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

The idea behind Ziff Davis and CyberAgent ADR 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.