Correlation Between Zodiac Clothing and Bosch

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

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

Diversification Opportunities for Zodiac Clothing and Bosch

-0.02

Correlation Coefficient

Zodiac Clothing  Bosch

Good diversification

The 3 months correlation between Zodiac and Bosch is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Zodiac Clothing and Bosch Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosch Limited and Zodiac Clothing 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 Zodiac Clothing are associated (or correlated) with Bosch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosch Limited has no effect on the direction of Zodiac Clothing i.e., Zodiac Clothing and Bosch go up and down completely randomly.

Pair Corralation between Zodiac Clothing and Bosch

Assuming the 90 days trading horizon Zodiac Clothing is expected to generate 2.06 times more return on investment than Bosch. However, Zodiac Clothing is 2.06 times more volatile than Bosch Limited. It trades about 0.09 of its potential returns per unit of risk. Bosch Limited is currently generating about -0.1 per unit of risk. If you would invest  12,149  in Zodiac Clothing on October 7, 2024 and sell it today you would earn a total of  1,045  from holding Zodiac Clothing or generate 8.6% return on investment over 90 days.

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

Zodiac Clothing  vs.  Bosch Limited

Zodiac Clothing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zodiac Clothing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Zodiac Clothing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bosch Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bosch Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Zodiac Clothing and Bosch

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

The idea behind Zodiac Clothing and Bosch Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.