Correlation Between Evolution Gaming and Zoom Video

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

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

Diversification Opportunities for Evolution Gaming and Zoom Video

-0.69

Correlation Coefficient

Evolution Gaming  Zoom Video

Excellent diversification

The 3 months correlation between Evolution and Zoom is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group 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 Evolution Gaming 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 Evolution Gaming Group 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 Evolution Gaming i.e., Evolution Gaming and Zoom Video go up and down completely randomly.

Pair Corralation between Evolution Gaming and Zoom Video

Assuming the 90 days horizon Evolution Gaming Group is expected to under-perform the Zoom Video. In addition to that, Evolution Gaming is 1.01 times more volatile than Zoom Video Communications. It trades about -0.1 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about 0.14 per unit of volatility. If you would invest  5,921  in Zoom Video Communications on September 29, 2024 and sell it today you would earn a total of  2,461  from holding Zoom Video Communications or generate 41.56% return on investment over 90 days.

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

Evolution Gaming Group  vs.  Zoom Video Communications

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zoom Video Communications

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Gaming and Zoom Video

The main advantage of trading using opposite Evolution Gaming and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Gaming 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 Evolution Gaming Group 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.