Correlation Between Comtech Telecommunicatio and DZS

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

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

Diversification Opportunities for Comtech Telecommunicatio and DZS

0.14

Correlation Coefficient

Comtech Telecommunicatio  DZS

Average diversification

The 3 months correlation between Comtech and DZS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and DZS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DZS Inc and Comtech Telecommunicatio 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 Comtech Telecommunications Corp are associated (or correlated) with DZS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DZS Inc has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and DZS go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and DZS

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to generate 1.34 times more return on investment than DZS. However, Comtech Telecommunicatio is 1.34 times more volatile than DZS Inc. It trades about 0.19 of its potential returns per unit of risk. DZS Inc is currently generating about 0.0 per unit of risk. If you would invest  170.00  in Comtech Telecommunications Corp on March 11, 2024 and sell it today you would earn a total of  49.00  from holding Comtech Telecommunications Corp or generate 28.82% return on investment over 90 days.

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

Comtech Telecommunications Cor  vs.  DZS Inc

Comtech Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comtech Telecommunications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

DZS Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DZS Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, DZS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comtech Telecommunicatio and DZS

The main advantage of trading using opposite Comtech Telecommunicatio and DZS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comtech Telecommunicatio 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 Comtech Telecommunications Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..