Correlation Between Zedge and Union Electric

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

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

Diversification Opportunities for Zedge and Union Electric

0.18

Correlation Coefficient

Zedge  Union Electric

Average diversification

The 3 months correlation between Zedge and Union is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric and Zedge 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 Zedge Inc are associated (or correlated) with Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of Zedge i.e., Zedge and Union Electric go up and down completely randomly.

Pair Corralation between Zedge and Union Electric

Given the investment horizon of 90 days Zedge Inc is expected to generate 1.03 times more return on investment than Union Electric. However, Zedge is 1.03 times more volatile than Union Electric. It trades about 0.04 of its potential returns per unit of risk. Union Electric is currently generating about 0.04 per unit of risk. If you would invest  174.00  in Zedge Inc on September 14, 2024 and sell it today you would earn a total of  102.00  from holding Zedge Inc or generate 58.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.43%
Values	Daily Returns

Zedge Inc  vs.  Union Electric

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Union Electric

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Union Electric are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Union Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zedge and Union Electric

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

The idea behind Zedge Inc and Union Electric 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.