Correlation Between Sleepless and ZCash

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

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

Diversification Opportunities for Sleepless and ZCash

0.66

Correlation Coefficient

Sleepless  ZCash

Poor diversification

The 3 months correlation between Sleepless and ZCash is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sleepless and ZCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCash and Sleepless 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 Sleepless are associated (or correlated) with ZCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZCash has no effect on the direction of Sleepless i.e., Sleepless and ZCash go up and down completely randomly.

Pair Corralation between Sleepless and ZCash

Assuming the 90 days horizon Sleepless is expected to generate 1.27 times more return on investment than ZCash. However, Sleepless is 1.27 times more volatile than ZCash. It trades about 0.2 of its potential returns per unit of risk. ZCash is currently generating about 0.22 per unit of risk. If you would invest  36.00  in Sleepless on September 2, 2024 and sell it today you would earn a total of  42.00  from holding Sleepless or generate 116.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sleepless  vs.  ZCash

Sleepless

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sleepless are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Sleepless exhibited solid returns over the last few months and may actually be approaching a breakup point.

ZCash

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZCash are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ZCash exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sleepless and ZCash

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

The idea behind Sleepless and ZCash 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.