Correlation Between EZGO Technologies and Tapestry

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

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

Diversification Opportunities for EZGO Technologies and Tapestry

-0.86

Correlation Coefficient

EZGO Technologies  Tapestry

Pay attention - limited upside

The 3 months correlation between EZGO and Tapestry is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry 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 Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of EZGO Technologies i.e., EZGO Technologies and Tapestry go up and down completely randomly.

Pair Corralation between EZGO Technologies and Tapestry

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the Tapestry. In addition to that, EZGO Technologies is 1.95 times more volatile than Tapestry. It trades about -0.51 of its total potential returns per unit of risk. Tapestry is currently generating about 0.26 per unit of volatility. If you would invest  5,860  in Tapestry on September 23, 2024 and sell it today you would earn a total of  555.00  from holding Tapestry or generate 9.47% return on investment over 90 days.

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

EZGO Technologies  vs.  Tapestry

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Tapestry

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EZGO Technologies and Tapestry

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

The idea behind EZGO Technologies and Tapestry 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.