Correlation Between Zenvia and Fuse Science

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

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

Diversification Opportunities for Zenvia and Fuse Science

0.21

Correlation Coefficient

Zenvia  Fuse Science

Modest diversification

The 3 months correlation between Zenvia and Fuse is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zenvia Inc and Fuse Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuse Science and Zenvia 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 Zenvia Inc are associated (or correlated) with Fuse Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuse Science has no effect on the direction of Zenvia i.e., Zenvia and Fuse Science go up and down completely randomly.

Pair Corralation between Zenvia and Fuse Science

Given the investment horizon of 90 days Zenvia is expected to generate 2.24 times less return on investment than Fuse Science. But when comparing it to its historical volatility, Zenvia Inc is 2.2 times less risky than Fuse Science. It trades about 0.05 of its potential returns per unit of risk. Fuse Science is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.25  in Fuse Science on October 11, 2024 and sell it today you would lose (0.75) from holding Fuse Science or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Zenvia Inc  vs.  Fuse Science

Zenvia Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zenvia Inc are ranked lower than 14 (%) 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.

Fuse Science

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fuse Science are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fuse Science reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zenvia and Fuse Science

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

The idea behind Zenvia Inc and Fuse Science 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.