Correlation Between DZS and Optical Cable

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

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

Diversification Opportunities for DZS and Optical Cable

0.71

Correlation Coefficient

DZS  Optical Cable

Poor diversification

The 3 months correlation between DZS and Optical is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding DZS Inc and Optical Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optical Cable and DZS 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 DZS Inc are associated (or correlated) with Optical Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optical Cable has no effect on the direction of DZS i.e., DZS and Optical Cable go up and down completely randomly.

Pair Corralation between DZS and Optical Cable

If you would invest  18.00  in DZS Inc on September 21, 2024 and sell it today you would earn a total of  0.00  from holding DZS Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

DZS Inc  vs.  Optical Cable

DZS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DZS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, DZS is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Optical Cable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optical Cable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with DZS and Optical Cable

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

The idea behind DZS Inc and Optical Cable 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..