Correlation Between DZS and Apple

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

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

Diversification Opportunities for DZS and Apple

0.66

Correlation Coefficient

DZS  Apple

Poor diversification

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

Pair Corralation between DZS and Apple

Given the investment horizon of 90 days DZS Inc is expected to under-perform the Apple. In addition to that, DZS is 3.14 times more volatile than Apple Inc. It trades about -0.07 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.04 per unit of volatility. If you would invest  14,411  in Apple Inc on February 5, 2024 and sell it today you would earn a total of  3,927  from holding Apple Inc or generate 27.25% return on investment over 90 days.

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

DZS Inc  vs.  Apple Inc

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with DZS and Apple

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

The idea behind DZS Inc and Apple 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.

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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..