Correlation Between Eastman Chemical and Zoom Video

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

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

Diversification Opportunities for Eastman Chemical and Zoom Video

-0.45

Correlation Coefficient

Eastman Chemical  Zoom Video

Very good diversification

The 3 months correlation between Eastman and Zoom is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co 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 Eastman Chemical 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 Eastman Chemical Co 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 Eastman Chemical i.e., Eastman Chemical and Zoom Video go up and down completely randomly.

Pair Corralation between Eastman Chemical and Zoom Video

Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the Zoom Video. In addition to that, Eastman Chemical is 1.11 times more volatile than Zoom Video Communications. It trades about 0.0 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about 0.0 per unit of volatility. If you would invest  8,312  in Zoom Video Communications on December 28, 2024 and sell it today you would lose (27.00) from holding Zoom Video Communications or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.69%
Values	Daily Returns

Eastman Chemical Co  vs.  Zoom Video Communications

Eastman Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastman Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eastman Chemical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Eastman Chemical and Zoom Video

The main advantage of trading using opposite Eastman Chemical and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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 Eastman Chemical Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.