Correlation Between Zurn Elkay and Borqs Technologies

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

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

Diversification Opportunities for Zurn Elkay and Borqs Technologies

-0.78

Correlation Coefficient

Zurn Elkay  Borqs Technologies

Pay attention - limited upside

The 3 months correlation between Zurn and Borqs is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and Borqs Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borqs Technologies and Zurn Elkay 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 Zurn Elkay Water are associated (or correlated) with Borqs Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borqs Technologies has no effect on the direction of Zurn Elkay i.e., Zurn Elkay and Borqs Technologies go up and down completely randomly.

Pair Corralation between Zurn Elkay and Borqs Technologies

Considering the 90-day investment horizon Zurn Elkay Water is expected to generate 0.3 times more return on investment than Borqs Technologies. However, Zurn Elkay Water is 3.38 times less risky than Borqs Technologies. It trades about 0.08 of its potential returns per unit of risk. Borqs Technologies is currently generating about -0.06 per unit of risk. If you would invest  2,183  in Zurn Elkay Water on September 26, 2024 and sell it today you would earn a total of  1,599  from holding Zurn Elkay Water or generate 73.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.63%
Values	Daily Returns

Zurn Elkay Water  vs.  Borqs Technologies

Zurn Elkay Water

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Zurn Elkay may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Borqs Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borqs Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Borqs Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zurn Elkay and Borqs Technologies

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

The idea behind Zurn Elkay Water and Borqs Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.