Correlation Between ZEN Graphene and Applied Digital

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

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

Diversification Opportunities for ZEN Graphene and Applied Digital

0.14

Correlation Coefficient

ZEN Graphene  Applied Digital

Average diversification

The 3 months correlation between ZEN and Applied is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ZEN Graphene Solutions and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and ZEN Graphene 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 ZEN Graphene Solutions are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of ZEN Graphene i.e., ZEN Graphene and Applied Digital go up and down completely randomly.

Pair Corralation between ZEN Graphene and Applied Digital

Given the investment horizon of 90 days ZEN Graphene Solutions is expected to generate 0.71 times more return on investment than Applied Digital. However, ZEN Graphene Solutions is 1.4 times less risky than Applied Digital. It trades about 0.1 of its potential returns per unit of risk. Applied Digital is currently generating about 0.0 per unit of risk. If you would invest  97.00  in ZEN Graphene Solutions on December 28, 2024 and sell it today you would earn a total of  27.00  from holding ZEN Graphene Solutions or generate 27.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

ZEN Graphene Solutions  vs.  Applied Digital

ZEN Graphene Solutions

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ZEN Graphene Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, ZEN Graphene disclosed solid returns over the last few months and may actually be approaching a breakup point.

Applied Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Applied 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 ZEN Graphene and Applied Digital

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

The idea behind ZEN Graphene Solutions and Applied 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.