Correlation Between Zoom Video and Light Science

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

Diversification Opportunities for Zoom Video and Light Science

0.16

Correlation Coefficient

Zoom Video  Light Science

Average diversification

The 3 months correlation between Zoom and Light is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno 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 Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Zoom Video i.e., Zoom Video and Light Science go up and down completely randomly.

Pair Corralation between Zoom Video and Light Science

Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 0.63 times more return on investment than Light Science. However, Zoom Video Communications is 1.58 times less risky than Light Science. It trades about 0.07 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.03 per unit of risk. If you would invest  7,395  in Zoom Video Communications on October 26, 2024 and sell it today you would earn a total of  566.00  from holding Zoom Video Communications or generate 7.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Zoom Video Communications  vs.  Light Science Technologies

Zoom Video Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Zoom Video may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Light Science Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Light Science Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Zoom Video and Light Science

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

The idea behind Zoom Video Communications and Light Science Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.