Correlation Between Zoom Video and Polar Capital

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

Diversification Opportunities for Zoom Video and Polar Capital

-0.31

Correlation Coefficient

Zoom Video  Polar Capital

Very good diversification

The 3 months correlation between Zoom and Polar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Technology 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 Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of Zoom Video i.e., Zoom Video and Polar Capital go up and down completely randomly.

Pair Corralation between Zoom Video and Polar Capital

Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 0.88 times more return on investment than Polar Capital. However, Zoom Video Communications is 1.14 times less risky than Polar Capital. It trades about -0.03 of its potential returns per unit of risk. Polar Capital Technology is currently generating about -0.1 per unit of risk. If you would invest  8,537  in Zoom Video Communications on December 21, 2024 and sell it today you would lose (252.00) from holding Zoom Video Communications or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Zoom Video Communications  vs.  Polar Capital Technology

Zoom Video Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoom Video Communications has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Polar Capital Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polar Capital Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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 Polar Capital

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

The idea behind Zoom Video Communications and Polar Capital Technology 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.