Correlation Between Kuaishou Technology and Zhihu

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

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

Diversification Opportunities for Kuaishou Technology and Zhihu

0.74

Correlation Coefficient

Kuaishou Technology  Zhihu

Poor diversification

The 3 months correlation between Kuaishou and Zhihu is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kuaishou Technology 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 Kuaishou Technology 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 Kuaishou Technology 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 Kuaishou Technology i.e., Kuaishou Technology and Zhihu go up and down completely randomly.

Pair Corralation between Kuaishou Technology and Zhihu

Assuming the 90 days horizon Kuaishou Technology is expected to generate 1.21 times more return on investment than Zhihu. However, Kuaishou Technology is 1.21 times more volatile than Zhihu Inc ADR. It trades about 0.1 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.11 per unit of risk. If you would invest  108.00  in Kuaishou Technology on December 28, 2024 and sell it today you would earn a total of  34.00  from holding Kuaishou Technology or generate 31.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Kuaishou Technology  vs.  Zhihu Inc ADR

Kuaishou Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kuaishou Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Kuaishou Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Zhihu Inc ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 8 (%) 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 Kuaishou Technology and Zhihu

The main advantage of trading using opposite Kuaishou Technology and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuaishou Technology 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 Kuaishou Technology 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.