Correlation Between ZJK Industrial and Western Digital

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

By analyzing existing cross correlation between ZJK Industrial Co, and Western Digital, you can compare the effects of market volatilities on ZJK Industrial and Western Digital 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 ZJK Industrial with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZJK Industrial and Western Digital.

Diversification Opportunities for ZJK Industrial and Western Digital

0.66

Correlation Coefficient

ZJK Industrial  Western Digital

Poor diversification

The 3 months correlation between ZJK and Western is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ZJK Industrial Co, and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and ZJK Industrial 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 ZJK Industrial Co, are associated (or correlated) with Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of ZJK Industrial i.e., ZJK Industrial and Western Digital go up and down completely randomly.

Pair Corralation between ZJK Industrial and Western Digital

Considering the 90-day investment horizon ZJK Industrial Co, is expected to under-perform the Western Digital. In addition to that, ZJK Industrial is 2.92 times more volatile than Western Digital. It trades about -0.07 of its total potential returns per unit of risk. Western Digital is currently generating about -0.03 per unit of volatility. If you would invest  4,803  in Western Digital on December 18, 2024 and sell it today you would lose (328.00) from holding Western Digital or give up 6.83% of portfolio value over 90 days.

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

ZJK Industrial Co,  vs.  Western Digital

ZJK Industrial Co,

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZJK Industrial Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Western Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Western Digital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ZJK Industrial and Western Digital

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

The idea behind ZJK Industrial Co, and Western Digital 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.