Correlation Between THR and ZEN
Can any of the company-specific risk be diversified away by investing in both THR and ZEN 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 THR and ZEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THR and ZEN, you can compare the effects of market volatilities on THR and ZEN 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 THR with a short position of ZEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of THR and ZEN.
Diversification Opportunities for THR and ZEN
Good diversification
The 3 months correlation between THR and ZEN is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding THR and ZEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN and THR 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 THR are associated (or correlated) with ZEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN has no effect on the direction of THR i.e., THR and ZEN go up and down completely randomly.
Pair Corralation between THR and ZEN
Assuming the 90 days trading horizon THR is expected to generate 10.08 times more return on investment than ZEN. However, THR is 10.08 times more volatile than ZEN. It trades about 0.11 of its potential returns per unit of risk. ZEN is currently generating about 0.03 per unit of risk. If you would invest 148,800 in THR on January 19, 2024 and sell it today you would earn a total of 900,915 from holding THR or generate 605.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 38.14% |
| Values | Daily Returns |
THR vs. ZEN
Performance |
| Timeline |
| THR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ZEN |
THR and ZEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THR and ZEN
The main advantage of trading using opposite THR and ZEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THR position performs unexpectedly, ZEN 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 ZEN will offset losses from the drop in ZEN's long position.The idea behind THR and ZEN 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |