Correlation Between Sinopec Oilfield and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Sinopec Oilfield 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 Sinopec Oilfield and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinopec Oilfield Service and Zoom Video Communications, you can compare the effects of market volatilities on Sinopec Oilfield 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 Sinopec Oilfield with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Oilfield and Zoom Video.
Diversification Opportunities for Sinopec Oilfield and Zoom Video
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sinopec and Zoom is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Oilfield Service 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 Sinopec Oilfield 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 Sinopec Oilfield Service 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 Sinopec Oilfield i.e., Sinopec Oilfield and Zoom Video go up and down completely randomly.
Pair Corralation between Sinopec Oilfield and Zoom Video
Assuming the 90 days trading horizon Sinopec Oilfield Service is expected to generate 0.78 times more return on investment than Zoom Video. However, Sinopec Oilfield Service is 1.29 times less risky than Zoom Video. It trades about 0.06 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.04 per unit of risk. If you would invest 7.25 in Sinopec Oilfield Service on September 13, 2024 and sell it today you would earn a total of 0.20 from holding Sinopec Oilfield Service or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sinopec Oilfield Service vs. Zoom Video Communications
Performance |
| Timeline |
| Sinopec Oilfield Service |
| Zoom Video Communications |
Sinopec Oilfield and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Oilfield and Zoom Video
The main advantage of trading using opposite Sinopec Oilfield and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Oilfield 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.| Sinopec Oilfield vs. COLUMBIA SPORTSWEAR | Sinopec Oilfield vs. Lendlease Group | Sinopec Oilfield vs. WILLIS LEASE FIN | Sinopec Oilfield vs. LG Display Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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