Correlation Between Kanzhun and Paychex

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

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

Diversification Opportunities for Kanzhun and Paychex

0.64

Correlation Coefficient

Kanzhun  Paychex

Poor diversification

The 3 months correlation between Kanzhun and Paychex is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kanzhun Ltd ADR and Paychex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paychex and Kanzhun 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 Kanzhun Ltd ADR are associated (or correlated) with Paychex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paychex has no effect on the direction of Kanzhun i.e., Kanzhun and Paychex go up and down completely randomly.

Pair Corralation between Kanzhun and Paychex

Allowing for the 90-day total investment horizon Kanzhun Ltd ADR is expected to generate 3.22 times more return on investment than Paychex. However, Kanzhun is 3.22 times more volatile than Paychex. It trades about 0.1 of its potential returns per unit of risk. Paychex is currently generating about 0.07 per unit of risk. If you would invest  1,350  in Kanzhun Ltd ADR on November 28, 2024 and sell it today you would earn a total of  239.00  from holding Kanzhun Ltd ADR or generate 17.7% return on investment over 90 days.

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

Kanzhun Ltd ADR  vs.  Paychex

Kanzhun Ltd ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kanzhun Ltd ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kanzhun showed solid returns over the last few months and may actually be approaching a breakup point.

Paychex

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paychex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Paychex is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kanzhun and Paychex

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

The idea behind Kanzhun Ltd ADR and Paychex 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.