Correlation Between Elutia and Zhihu

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

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

Diversification Opportunities for Elutia and Zhihu

-0.28

Correlation Coefficient

Elutia  Zhihu

Very good diversification

The 3 months correlation between Elutia and Zhihu is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elutia Inc 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 Elutia 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 Elutia Inc 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 Elutia i.e., Elutia and Zhihu go up and down completely randomly.

Pair Corralation between Elutia and Zhihu

Given the investment horizon of 90 days Elutia is expected to generate 129.37 times less return on investment than Zhihu. In addition to that, Elutia is 1.68 times more volatile than Zhihu Inc ADR. It trades about 0.0 of its total potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.14 per unit of volatility. If you would invest  368.00  in Zhihu Inc ADR on December 18, 2024 and sell it today you would earn a total of  141.00  from holding Zhihu Inc ADR or generate 38.32% return on investment over 90 days.

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

Elutia Inc  vs.  Zhihu Inc ADR

Elutia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elutia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Elutia is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Elutia and Zhihu

The main advantage of trading using opposite Elutia and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elutia 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 Elutia Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.