Correlation Between Zoom Video and Cellnex Telecom

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

Diversification Opportunities for Zoom Video and Cellnex Telecom

0.14

Correlation Coefficient

Zoom Video  Cellnex Telecom

Average diversification

The 3 months correlation between Zoom and Cellnex is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Cellnex Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellnex Telecom SA 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 Cellnex Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellnex Telecom SA has no effect on the direction of Zoom Video i.e., Zoom Video and Cellnex Telecom go up and down completely randomly.

Pair Corralation between Zoom Video and Cellnex Telecom

Assuming the 90 days trading horizon Zoom Video is expected to generate 2.1 times less return on investment than Cellnex Telecom. In addition to that, Zoom Video is 1.0 times more volatile than Cellnex Telecom SA. It trades about 0.01 of its total potential returns per unit of risk. Cellnex Telecom SA is currently generating about 0.03 per unit of volatility. If you would invest  3,352  in Cellnex Telecom SA on December 3, 2024 and sell it today you would earn a total of  76.00  from holding Cellnex Telecom SA or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Zoom Video Communications  vs.  Cellnex Telecom SA

Zoom Video Communications

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zoom Video is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Cellnex Telecom SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cellnex Telecom SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cellnex Telecom is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zoom Video and Cellnex Telecom

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

The idea behind Zoom Video Communications and Cellnex Telecom SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.