Correlation Between Zoom Video and Adaro Energy
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Adaro Energy 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 Adaro Energy 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 Adaro Energy Tbk, you can compare the effects of market volatilities on Zoom Video and Adaro Energy 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 Adaro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Adaro Energy.
Diversification Opportunities for Zoom Video and Adaro Energy
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and Adaro is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk 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 Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of Zoom Video i.e., Zoom Video and Adaro Energy go up and down completely randomly.
Pair Corralation between Zoom Video and Adaro Energy
Allowing for the 90-day total investment horizon Zoom Video is expected to generate 5.61 times less return on investment than Adaro Energy. But when comparing it to its historical volatility, Zoom Video Communications is 3.73 times less risky than Adaro Energy. It trades about 0.03 of its potential returns per unit of risk. Adaro Energy Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 695.00 in Adaro Energy Tbk on August 28, 2024 and sell it today you would earn a total of 445.00 from holding Adaro Energy Tbk or generate 64.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.91% |
| Values | Daily Returns |
Zoom Video Communications vs. Adaro Energy Tbk
Performance |
| Timeline |
| Zoom Video Communications |
| Adaro Energy Tbk |
Zoom Video and Adaro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Adaro Energy
The main advantage of trading using opposite Zoom Video and Adaro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Adaro Energy 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 Adaro Energy will offset losses from the drop in Adaro Energy's long position.The idea behind Zoom Video Communications and Adaro Energy Tbk 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.| Adaro Energy vs. Alliance Resource Partners | Adaro Energy vs. Astera Labs, Common | Adaro Energy vs. Autodesk | Adaro Energy vs. Applied Blockchain |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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