Correlation Between Zicix Corp and MicroStrategy Incorporated

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

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

Diversification Opportunities for Zicix Corp and MicroStrategy Incorporated

-0.82

Correlation Coefficient

Zicix Corp  MicroStrategy Incorporated

Pay attention - limited upside

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

Pair Corralation between Zicix Corp and MicroStrategy Incorporated

Given the investment horizon of 90 days Zicix Corp is expected to under-perform the MicroStrategy Incorporated. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zicix Corp is 2.6 times less risky than MicroStrategy Incorporated. The pink sheet trades about -0.21 of its potential returns per unit of risk. The MicroStrategy Incorporated is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  32,767  in MicroStrategy Incorporated on September 15, 2024 and sell it today you would earn a total of  8,100  from holding MicroStrategy Incorporated or generate 24.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Zicix Corp  vs.  MicroStrategy Incorporated

Zicix Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zicix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

MicroStrategy Incorporated

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zicix Corp and MicroStrategy Incorporated

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

The idea behind Zicix Corp and MicroStrategy Incorporated 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.