Correlation Between Kanzhun and Lizhi

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

Diversification Opportunities for Kanzhun and Lizhi

0.57

Correlation Coefficient

Kanzhun  Lizhi

Very weak diversification

The 3 months correlation between Kanzhun and Lizhi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kanzhun Ltd ADR and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc 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 Lizhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhi Inc has no effect on the direction of Kanzhun i.e., Kanzhun and Lizhi go up and down completely randomly.

Pair Corralation between Kanzhun and Lizhi

Allowing for the 90-day total investment horizon Kanzhun Ltd ADR is expected to generate 0.6 times more return on investment than Lizhi. However, Kanzhun Ltd ADR is 1.68 times less risky than Lizhi. It trades about 0.25 of its potential returns per unit of risk. Lizhi Inc is currently generating about 0.05 per unit of risk. If you would invest  1,362  in Kanzhun Ltd ADR on December 20, 2024 and sell it today you would earn a total of  694.00  from holding Kanzhun Ltd ADR or generate 50.95% return on investment over 90 days.

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

Kanzhun Ltd ADR  vs.  Lizhi Inc

Kanzhun Ltd ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kanzhun Ltd ADR are ranked lower than 19 (%) 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.

Lizhi Inc

Risk-Adjusted Performance

Modest

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

Pair Trading with Kanzhun and Lizhi

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

The idea behind Kanzhun Ltd ADR and Lizhi Inc 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.