diversifiable risk of combining Frequency Electronics and DZS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frequency Electronics and DZS Inc, you can compare the effects of market volatilities on Frequency Electronics and DZS 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 Frequency Electronics with a short position of DZS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frequency Electronics and DZS.
Diversification Opportunities for Frequency Electronics and DZS
Pair Corralation between Frequency Electronics and DZS
Given the investment horizon of 90 days Frequency Electronics is expected to generate 0.33 times more return on investment than DZS. However, Frequency Electronics is 3.0 times less risky than DZS. It trades about 0.13 of its potential returns per unit of risk. DZS Inc is currently generating about -0.12 per unit of risk. If you would invest 1,024 in Frequency Electronics on December 1, 2023 and sell it today you would earn a total of 47.00 from holding Frequency Electronics or generate 4.59% return on investment over 90 days.
Frequency Electronics vs. DZS Inc
Frequency Electronics and DZS Volatility Contrast
Pair Trading with Frequency Electronics and DZSThe main advantage of trading using opposite Frequency Electronics and DZS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frequency Electronics position performs unexpectedly, DZS 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 DZS will offset losses from the drop in DZS's long position. The idea behind Frequency Electronics and DZS Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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