Correlation Between Coda Octopus and Zoom Video

Can any of the company-specific risk be diversified away by investing in both Coda Octopus 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 Coda Octopus and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coda Octopus Group and Zoom Video Communications, you can compare the effects of market volatilities on Coda Octopus 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 Coda Octopus with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coda Octopus and Zoom Video.

Diversification Opportunities for Coda Octopus and Zoom Video

0.6

Correlation Coefficient

Coda Octopus  Zoom Video

Poor diversification

The 3 months correlation between Coda and Zoom is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group 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 Coda Octopus 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 Coda Octopus Group 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 Coda Octopus i.e., Coda Octopus and Zoom Video go up and down completely randomly.

Pair Corralation between Coda Octopus and Zoom Video

Given the investment horizon of 90 days Coda Octopus Group is expected to generate 1.33 times more return on investment than Zoom Video. However, Coda Octopus is 1.33 times more volatile than Zoom Video Communications. It trades about 0.02 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.03 per unit of risk. If you would invest  706.00  in Coda Octopus Group on September 29, 2024 and sell it today you would earn a total of  95.00  from holding Coda Octopus Group or generate 13.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Coda Octopus Group  vs.  Zoom Video Communications

Coda Octopus Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Coda Octopus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zoom Video Communications

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coda Octopus and Zoom Video

The main advantage of trading using opposite Coda Octopus and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus 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.

The idea behind Coda Octopus Group and Zoom Video Communications 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..