Correlation Between Zoom Video and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Hong Kong 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 Hong Kong 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 Hong Kong and, you can compare the effects of market volatilities on Zoom Video and Hong Kong 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 Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Hong Kong.
Diversification Opportunities for Zoom Video and Hong Kong
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and Hong is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Hong Kong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong 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 Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong has no effect on the direction of Zoom Video i.e., Zoom Video and Hong Kong go up and down completely randomly.
Pair Corralation between Zoom Video and Hong Kong
Allowing for the 90-day total investment horizon Zoom Video Communications is expected to generate 0.6 times more return on investment than Hong Kong. However, Zoom Video Communications is 1.67 times less risky than Hong Kong. It trades about 0.23 of its potential returns per unit of risk. Hong Kong and is currently generating about -0.05 per unit of risk. If you would invest 7,478 in Zoom Video Communications on August 31, 2024 and sell it today you would earn a total of 1,058 from holding Zoom Video Communications or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. Hong Kong and
Performance |
| Timeline |
| Zoom Video Communications |
| Hong Kong |
Zoom Video and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Hong Kong
The main advantage of trading using opposite Zoom Video and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.The idea behind Zoom Video Communications and Hong Kong and 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.| Hong Kong vs. Henderson Land Development | Hong Kong vs. CLP Holdings | Hong Kong vs. Power Assets Holdings | Hong Kong vs. Hang Lung Properties |
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 CEOs Directory module to screen CEOs from public companies around the world.
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