Correlation Between Imax Corp and Zhihu

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

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

Diversification Opportunities for Imax Corp and Zhihu

-0.39

Correlation Coefficient

Imax Corp  Zhihu

Very good diversification

The 3 months correlation between Imax and Zhihu is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Imax Corp 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 Imax Corp 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 Imax Corp 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 Imax Corp i.e., Imax Corp and Zhihu go up and down completely randomly.

Pair Corralation between Imax Corp and Zhihu

Given the investment horizon of 90 days Imax Corp is expected to generate 1.0 times more return on investment than Zhihu. However, Imax Corp is 1.0 times less risky than Zhihu. It trades about -0.16 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.32 per unit of risk. If you would invest  2,555  in Imax Corp on October 10, 2024 and sell it today you would lose (159.00) from holding Imax Corp or give up 6.22% of portfolio value over 90 days.

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

Imax Corp  vs.  Zhihu Inc ADR

Imax Corp

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Imax Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Imax Corp showed 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 latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Imax Corp and Zhihu

The main advantage of trading using opposite Imax Corp and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imax Corp 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 Imax Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.