Correlation Between Zoom Video and China Petroleum
Can any of the company-specific risk be diversified away by investing in both Zoom Video and China Petroleum 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 Petroleum 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 Petroleum Chemical, you can compare the effects of market volatilities on Zoom Video and China Petroleum 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 Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and China Petroleum.
Diversification Opportunities for Zoom Video and China Petroleum
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and China is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical 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 Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of Zoom Video i.e., Zoom Video and China Petroleum go up and down completely randomly.
Pair Corralation between Zoom Video and China Petroleum
Allowing for the 90-day total investment horizon Zoom Video is expected to generate 23.56 times less return on investment than China Petroleum. But when comparing it to its historical volatility, Zoom Video Communications is 9.22 times less risky than China Petroleum. It trades about 0.03 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 47.00 in China Petroleum Chemical on August 27, 2024 and sell it today you would earn a total of 6.00 from holding China Petroleum Chemical or generate 12.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.77% |
| Values | Daily Returns |
Zoom Video Communications vs. China Petroleum Chemical
Performance |
| Timeline |
| Zoom Video Communications |
| China Petroleum Chemical |
Zoom Video and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and China Petroleum
The main advantage of trading using opposite Zoom Video and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, China Petroleum 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 Petroleum will offset losses from the drop in China Petroleum's long position.The idea behind Zoom Video Communications and China Petroleum Chemical 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.| China Petroleum vs. Equinor ASA ADR | China Petroleum vs. TotalEnergies SE ADR | China Petroleum vs. Ecopetrol SA ADR | China Petroleum vs. National Fuel Gas |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |