Correlation Between Cazoo and Jiuzi Holdings

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

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

Diversification Opportunities for Cazoo and Jiuzi Holdings

-0.07

Correlation Coefficient

Cazoo  Jiuzi Holdings

Good diversification

The 3 months correlation between Cazoo and Jiuzi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cazoo Group and Jiuzi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiuzi Holdings and Cazoo 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 Cazoo Group are associated (or correlated) with Jiuzi Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiuzi Holdings has no effect on the direction of Cazoo i.e., Cazoo and Jiuzi Holdings go up and down completely randomly.

Pair Corralation between Cazoo and Jiuzi Holdings

Given the investment horizon of 90 days Cazoo Group is expected to under-perform the Jiuzi Holdings. In addition to that, Cazoo is 1.39 times more volatile than Jiuzi Holdings. It trades about -0.04 of its total potential returns per unit of risk. Jiuzi Holdings is currently generating about -0.04 per unit of volatility. If you would invest  1,800  in Jiuzi Holdings on January 31, 2024 and sell it today you would lose (1,762) from holding Jiuzi Holdings or give up 97.89% of portfolio value over 90 days.

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

Cazoo Group  vs.  Jiuzi Holdings

Cazoo Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cazoo Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Cazoo displayed solid returns over the last few months and may actually be approaching a breakup point.

Jiuzi Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiuzi Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Jiuzi Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Cazoo and Jiuzi Holdings

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

The idea behind Cazoo Group and Jiuzi Holdings 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .