Correlation Between Burnham Holdings and Zhihu

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

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

Diversification Opportunities for Burnham Holdings and Zhihu

-0.4

Correlation Coefficient

Burnham Holdings  Zhihu

Very good diversification

The 3 months correlation between Burnham and Zhihu is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Burnham Holdings PFD 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 Burnham Holdings 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 Burnham Holdings PFD 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 Burnham Holdings i.e., Burnham Holdings and Zhihu go up and down completely randomly.

Pair Corralation between Burnham Holdings and Zhihu

Assuming the 90 days horizon Burnham Holdings PFD is expected to generate 0.13 times more return on investment than Zhihu. However, Burnham Holdings PFD is 7.97 times less risky than Zhihu. It trades about 0.13 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.02 per unit of risk. If you would invest  5,175  in Burnham Holdings PFD on October 24, 2024 and sell it today you would earn a total of  150.00  from holding Burnham Holdings PFD or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Burnham Holdings PFD  vs.  Zhihu Inc ADR

Burnham Holdings PFD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings PFD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Burnham Holdings is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Zhihu Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhihu Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Zhihu is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Burnham Holdings and Zhihu

The main advantage of trading using opposite Burnham Holdings and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burnham Holdings 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 Burnham Holdings PFD 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.