Correlation Between Alibaba Group and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Zoom Video 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 Alibaba Group and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Zoom Video Communications, you can compare the effects of market volatilities on Alibaba Group and Zoom Video 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 Alibaba Group with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Zoom Video.
Diversification Opportunities for Alibaba Group and Zoom Video
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alibaba and Zoom is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications and Alibaba Group 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 Alibaba Group Holding are associated (or correlated) with Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of Alibaba Group i.e., Alibaba Group and Zoom Video go up and down completely randomly.
Pair Corralation between Alibaba Group and Zoom Video
Assuming the 90 days trading horizon Alibaba Group Holding is expected to under-perform the Zoom Video. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.19 times less risky than Zoom Video. The stock trades about -0.23 of its potential returns per unit of risk. The Zoom Video Communications is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,680 in Zoom Video Communications on August 28, 2024 and sell it today you would earn a total of 400.00 from holding Zoom Video Communications or generate 23.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Zoom Video Communications
Performance |
| Timeline |
| Alibaba Group Holding |
| Zoom Video Communications |
Alibaba Group and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Zoom Video
The main advantage of trading using opposite Alibaba Group and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Zoom Video 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 Zoom Video will offset losses from the drop in Zoom Video's long position.| Alibaba Group vs. Prudential Financial | Alibaba Group vs. Agilent Technologies | Alibaba Group vs. Align Technology | Alibaba Group vs. Ameriprise Financial |
| Zoom Video vs. Apartment Investment and | Zoom Video vs. Telecomunicaes Brasileiras SA | Zoom Video vs. United Rentals | Zoom Video vs. Tyson Foods |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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