Correlation Between Integral and Zhihu

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

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

Diversification Opportunities for Integral and Zhihu

-0.48

Correlation Coefficient

Integral  Zhihu

Very good diversification

The 3 months correlation between Integral and Zhihu is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science 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 Integral 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 Integral Ad Science 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 Integral i.e., Integral and Zhihu go up and down completely randomly.

Pair Corralation between Integral and Zhihu

Considering the 90-day investment horizon Integral Ad Science is expected to under-perform the Zhihu. But the stock apears to be less risky and, when comparing its historical volatility, Integral Ad Science is 1.52 times less risky than Zhihu. The stock trades about 0.0 of its potential returns per unit of risk. The Zhihu Inc ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  326.00  in Zhihu Inc ADR on September 16, 2024 and sell it today you would earn a total of  50.00  from holding Zhihu Inc ADR or generate 15.34% return on investment over 90 days.

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

Integral Ad Science  vs.  Zhihu Inc ADR

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zhihu Inc ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Zhihu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integral and Zhihu

The main advantage of trading using opposite Integral and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral 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 Integral Ad Science 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.