Correlation Between Zoom Video and China Communications
Can any of the company-specific risk be diversified away by investing in both Zoom Video and China Communications 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 Zoom Video and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zoom Video Communications and China Communications Services, you can compare the effects of market volatilities on Zoom Video and China Communications 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 Zoom Video with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and China Communications.
Diversification Opportunities for Zoom Video and China Communications
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zoom and China is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and Zoom Video 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 Zoom Video Communications are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Zoom Video i.e., Zoom Video and China Communications go up and down completely randomly.
Pair Corralation between Zoom Video and China Communications
Assuming the 90 days trading horizon Zoom Video is expected to generate 10.24 times less return on investment than China Communications. But when comparing it to its historical volatility, Zoom Video Communications is 2.88 times less risky than China Communications. It trades about 0.02 of its potential returns per unit of risk. China Communications Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12.00 in China Communications Services on January 14, 2025 and sell it today you would earn a total of 33.00 from holding China Communications Services or generate 275.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. China Communications Services
Performance |
| Timeline |
| Zoom Video Communications |
| China Communications |
Zoom Video and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and China Communications
The main advantage of trading using opposite Zoom Video and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| Zoom Video vs. Corporate Travel Management | Zoom Video vs. ARROW ELECTRONICS | Zoom Video vs. Q2M Managementberatung AG | Zoom Video vs. Arrow Electronics |
| China Communications vs. Peijia Medical Limited | China Communications vs. MGIC INVESTMENT | China Communications vs. China Medical System | China Communications vs. Chuangs China Investments |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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