Correlation Between Zscaler and Rekor Systems

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

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

Diversification Opportunities for Zscaler and Rekor Systems

-0.42

Correlation Coefficient

Zscaler  Rekor Systems

Very good diversification

The 3 months correlation between Zscaler and Rekor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Zscaler and Rekor Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rekor Systems and Zscaler 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 Zscaler are associated (or correlated) with Rekor Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rekor Systems has no effect on the direction of Zscaler i.e., Zscaler and Rekor Systems go up and down completely randomly.

Pair Corralation between Zscaler and Rekor Systems

Allowing for the 90-day total investment horizon Zscaler is expected to generate 34.76 times less return on investment than Rekor Systems. But when comparing it to its historical volatility, Zscaler is 4.11 times less risky than Rekor Systems. It trades about 0.02 of its potential returns per unit of risk. Rekor Systems is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Rekor Systems on October 9, 2024 and sell it today you would earn a total of  135.00  from holding Rekor Systems or generate 127.36% return on investment over 90 days.

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

Zscaler  vs.  Rekor Systems

Zscaler

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zscaler are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zscaler is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Rekor Systems

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rekor Systems are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, Rekor Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zscaler and Rekor Systems

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

The idea behind Zscaler and Rekor Systems 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.