Correlation Between Zoom Video and UNICHARM

Can any of the company-specific risk be diversified away by investing in both Zoom Video and UNICHARM 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 UNICHARM 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 UNICHARM, you can compare the effects of market volatilities on Zoom Video and UNICHARM 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 UNICHARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and UNICHARM.

Diversification Opportunities for Zoom Video and UNICHARM

-0.95

Correlation Coefficient

Zoom Video  UNICHARM

Pay attention - limited upside

The 3 months correlation between Zoom and UNICHARM is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and UNICHARM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNICHARM 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 UNICHARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNICHARM has no effect on the direction of Zoom Video i.e., Zoom Video and UNICHARM go up and down completely randomly.

Pair Corralation between Zoom Video and UNICHARM

Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 1.0 times more return on investment than UNICHARM. However, Zoom Video Communications is 1.0 times less risky than UNICHARM. It trades about 0.2 of its potential returns per unit of risk. UNICHARM is currently generating about -0.21 per unit of risk. If you would invest  6,242  in Zoom Video Communications on September 28, 2024 and sell it today you would earn a total of  1,915  from holding Zoom Video Communications or generate 30.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Zoom Video Communications  vs.  UNICHARM

Zoom Video Communications

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zoom Video unveiled solid returns over the last few months and may actually be approaching a breakup point.

UNICHARM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNICHARM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Zoom Video and UNICHARM

The main advantage of trading using opposite Zoom Video and UNICHARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, UNICHARM 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 UNICHARM will offset losses from the drop in UNICHARM's long position.

The idea behind Zoom Video Communications and UNICHARM 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.