Correlation Between Zoom Video and Ideanomics

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

Diversification Opportunities for Zoom Video and Ideanomics

0.6

Correlation Coefficient

Zoom Video  Ideanomics

Poor diversification

The 3 months correlation between Zoom and Ideanomics is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Ideanomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideanomics 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 Ideanomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideanomics has no effect on the direction of Zoom Video i.e., Zoom Video and Ideanomics go up and down completely randomly.

Pair Corralation between Zoom Video and Ideanomics

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to under-perform the Ideanomics. But the stock apears to be less risky and, when comparing its historical volatility, Zoom Video Communications is 2.6 times less risky than Ideanomics. The stock trades about -0.03 of its potential returns per unit of risk. The Ideanomics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Ideanomics on February 8, 2024 and sell it today you would earn a total of  6.00  from holding Ideanomics or generate 6.19% return on investment over 90 days.

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

Zoom Video Communications  vs.  Ideanomics

Zoom Video Communications

Risk-Adjusted Performance

0 of 100

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 very healthy primary indicators, Zoom Video is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ideanomics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zoom Video and Ideanomics

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

The idea behind Zoom Video Communications and Ideanomics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.