Correlation Between Celestica and Zhihu

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

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

Diversification Opportunities for Celestica and Zhihu

-0.4

Correlation Coefficient

Celestica  Zhihu

Very good diversification

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

Pair Corralation between Celestica and Zhihu

Considering the 90-day investment horizon Celestica is expected to generate 1.57 times more return on investment than Zhihu. However, Celestica is 1.57 times more volatile than Zhihu Inc ADR. It trades about 0.08 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.14 per unit of risk. If you would invest  8,953  in Celestica on October 5, 2024 and sell it today you would earn a total of  354.00  from holding Celestica or generate 3.95% return on investment over 90 days.

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

Celestica  vs.  Zhihu Inc ADR

Celestica

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Celestica and Zhihu

The main advantage of trading using opposite Celestica and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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 Celestica 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.