Correlation Between Rocket Internet and Zoom Video

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

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

Diversification Opportunities for Rocket Internet and Zoom Video

0.28

Correlation Coefficient

Rocket Internet  Zoom Video

Modest diversification

The 3 months correlation between Rocket and Zoom is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE 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 Rocket Internet 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 Rocket Internet SE 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 Rocket Internet i.e., Rocket Internet and Zoom Video go up and down completely randomly.

Pair Corralation between Rocket Internet and Zoom Video

Assuming the 90 days trading horizon Rocket Internet SE is expected to generate 1.24 times more return on investment than Zoom Video. However, Rocket Internet is 1.24 times more volatile than Zoom Video Communications. It trades about 0.1 of its potential returns per unit of risk. Zoom Video Communications is currently generating about -0.06 per unit of risk. If you would invest  1,450  in Rocket Internet SE on October 10, 2024 and sell it today you would earn a total of  50.00  from holding Rocket Internet SE or generate 3.45% return on investment over 90 days.

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

Rocket Internet SE  vs.  Zoom Video Communications

Rocket Internet SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Rocket Internet is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Zoom Video Communications

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zoom Video unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocket Internet and Zoom Video

The main advantage of trading using opposite Rocket Internet and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Internet 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 Rocket Internet SE 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.