Correlation Between Zoom Video and Alvotech

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

Diversification Opportunities for Zoom Video and Alvotech

-0.47

Correlation Coefficient

Zoom Video  Alvotech

Very good diversification

The 3 months correlation between Zoom and Alvotech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech 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 Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Zoom Video i.e., Zoom Video and Alvotech go up and down completely randomly.

Pair Corralation between Zoom Video and Alvotech

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to under-perform the Alvotech. In addition to that, Zoom Video is 1.16 times more volatile than Alvotech. It trades about -0.13 of its total potential returns per unit of risk. Alvotech is currently generating about 0.48 per unit of volatility. If you would invest  1,149  in Alvotech on October 11, 2024 and sell it today you would earn a total of  176.00  from holding Alvotech or generate 15.32% return on investment over 90 days.

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

Zoom Video Communications  vs.  Alvotech

Zoom Video Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Alvotech

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zoom Video and Alvotech

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

The idea behind Zoom Video Communications and Alvotech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.