Correlation Between Ainsworth Game and Zhihu

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

By analyzing existing cross correlation between Ainsworth Game Technology and Zhihu Inc ADR, you can compare the effects of market volatilities on Ainsworth Game and Zhihu 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 Ainsworth Game with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and Zhihu.

Diversification Opportunities for Ainsworth Game and Zhihu

0.61

Correlation Coefficient

Ainsworth Game  Zhihu

Poor diversification

The 3 months correlation between Ainsworth and Zhihu is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Zhihu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhihu Inc ADR and Ainsworth Game 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 Ainsworth Game Technology are associated (or correlated) with Zhihu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhihu Inc ADR has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Zhihu go up and down completely randomly.

Pair Corralation between Ainsworth Game and Zhihu

Assuming the 90 days horizon Ainsworth Game is expected to generate 4.69 times less return on investment than Zhihu. In addition to that, Ainsworth Game is 1.22 times more volatile than Zhihu Inc ADR. It trades about 0.03 of its total potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.15 per unit of volatility. If you would invest  360.00  in Zhihu Inc ADR on December 20, 2024 and sell it today you would earn a total of  145.00  from holding Zhihu Inc ADR or generate 40.28% return on investment over 90 days.

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

Ainsworth Game Technology  vs.  Zhihu Inc ADR

Ainsworth Game Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ainsworth Game Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ainsworth Game may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Zhihu Inc ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Zhihu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ainsworth Game and Zhihu

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

The idea behind Ainsworth Game Technology and Zhihu Inc ADR 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.