Correlation Between EZGO Technologies and Crocs

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

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

Diversification Opportunities for EZGO Technologies and Crocs

-0.45

Correlation Coefficient

EZGO Technologies  Crocs

Very good diversification

The 3 months correlation between EZGO and Crocs is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Crocs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crocs Inc and EZGO Technologies 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 EZGO Technologies are associated (or correlated) with Crocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crocs Inc has no effect on the direction of EZGO Technologies i.e., EZGO Technologies and Crocs go up and down completely randomly.

Pair Corralation between EZGO Technologies and Crocs

Given the investment horizon of 90 days EZGO Technologies is expected to generate 3.33 times more return on investment than Crocs. However, EZGO Technologies is 3.33 times more volatile than Crocs Inc. It trades about 0.13 of its potential returns per unit of risk. Crocs Inc is currently generating about 0.19 per unit of risk. If you would invest  159.00  in EZGO Technologies on February 11, 2024 and sell it today you would earn a total of  31.00  from holding EZGO Technologies or generate 19.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

EZGO Technologies  vs.  Crocs Inc

EZGO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Crocs Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crocs Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Crocs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EZGO Technologies and Crocs

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

The idea behind EZGO Technologies and Crocs 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.