Correlation Between ZW Data and Power Solutions

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

By analyzing existing cross correlation between ZW Data Action and Power Solutions International,, you can compare the effects of market volatilities on ZW Data and Power Solutions 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 ZW Data with a short position of Power Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZW Data and Power Solutions.

Diversification Opportunities for ZW Data and Power Solutions

0.16

Correlation Coefficient

ZW Data  Power Solutions

Average diversification

The 3 months correlation between CNET and Power is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ZW Data Action and Power Solutions International, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solutions Inte and ZW Data 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 ZW Data Action are associated (or correlated) with Power Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solutions Inte has no effect on the direction of ZW Data i.e., ZW Data and Power Solutions go up and down completely randomly.

Pair Corralation between ZW Data and Power Solutions

Given the investment horizon of 90 days ZW Data is expected to generate 24.06 times less return on investment than Power Solutions. In addition to that, ZW Data is 1.41 times more volatile than Power Solutions International,. It trades about 0.01 of its total potential returns per unit of risk. Power Solutions International, is currently generating about 0.27 per unit of volatility. If you would invest  3,768  in Power Solutions International, on May 20, 2025 and sell it today you would earn a total of  4,799  from holding Power Solutions International, or generate 127.36% return on investment over 90 days.

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

ZW Data Action  vs.  Power Solutions International,

ZW Data Action

Risk-Adjusted Performance

Weakest

Over the last 90 days ZW Data Action has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, ZW Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Power Solutions Inte

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Power Solutions International, are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Power Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZW Data and Power Solutions

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

The idea behind ZW Data Action and Power Solutions International, 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.