Correlation Between Zegona Communications and Dentsply Sirona

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Can any of the company-specific risk be diversified away by investing in both Zegona Communications and Dentsply Sirona 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 Zegona Communications and Dentsply Sirona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Dentsply Sirona, you can compare the effects of market volatilities on Zegona Communications and Dentsply Sirona 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 Zegona Communications with a short position of Dentsply Sirona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Dentsply Sirona.

Diversification Opportunities for Zegona Communications and Dentsply Sirona

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Zegona and Dentsply is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Zegona Communications i.e., Zegona Communications and Dentsply Sirona go up and down completely randomly.

Pair Corralation between Zegona Communications and Dentsply Sirona

Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 7.07 times more return on investment than Dentsply Sirona. However, Zegona Communications is 7.07 times more volatile than Dentsply Sirona. It trades about 0.05 of its potential returns per unit of risk. Dentsply Sirona is currently generating about -0.03 per unit of risk. If you would invest  7,950  in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of  25,050  from holding Zegona Communications Plc or generate 315.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.88%
ValuesDaily Returns

Zegona Communications Plc  vs.  Dentsply Sirona

 Performance 
       Timeline  
Zegona Communications Plc 

Risk-Adjusted Performance

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Over the last 90 days Zegona Communications Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Zegona Communications is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Dentsply Sirona 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Zegona Communications and Dentsply Sirona Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zegona Communications and Dentsply Sirona

The main advantage of trading using opposite Zegona Communications and Dentsply Sirona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, Dentsply Sirona 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 Dentsply Sirona will offset losses from the drop in Dentsply Sirona's long position.
The idea behind Zegona Communications Plc and Dentsply Sirona 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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