Correlation Between Zoom Video and Evolution

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

Diversification Opportunities for Zoom Video and Evolution

0.33

Correlation Coefficient

Zoom Video  Evolution

Weak diversification

The 3 months correlation between Zoom and Evolution is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB 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 Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of Zoom Video i.e., Zoom Video and Evolution go up and down completely randomly.

Pair Corralation between Zoom Video and Evolution

Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the Evolution. In addition to that, Zoom Video is 1.09 times more volatile than Evolution AB. It trades about -0.11 of its total potential returns per unit of risk. Evolution AB is currently generating about 0.0 per unit of volatility. If you would invest  7,368  in Evolution AB on December 22, 2024 and sell it today you would lose (146.00) from holding Evolution AB or give up 1.98% of portfolio value over 90 days.

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

Zoom Video Communications  vs.  Evolution AB

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Evolution AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Evolution is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zoom Video and Evolution

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

The idea behind Zoom Video Communications and Evolution AB 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.