Correlation Between Shorepower Technologies and Zhihu

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

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

Diversification Opportunities for Shorepower Technologies and Zhihu

-0.22

Correlation Coefficient

Shorepower Technologies  Zhihu

Very good diversification

The 3 months correlation between Shorepower and Zhihu is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Shorepower Technologies 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 Shorepower Technologies 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 Shorepower Technologies 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 Shorepower Technologies i.e., Shorepower Technologies and Zhihu go up and down completely randomly.

Pair Corralation between Shorepower Technologies and Zhihu

Given the investment horizon of 90 days Shorepower Technologies is expected to generate 9.24 times more return on investment than Zhihu. However, Shorepower Technologies is 9.24 times more volatile than Zhihu Inc ADR. It trades about 0.23 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.16 per unit of risk. If you would invest  2.00  in Shorepower Technologies on September 16, 2024 and sell it today you would earn a total of  2.50  from holding Shorepower Technologies or generate 125.0% return on investment over 90 days.

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

Shorepower Technologies  vs.  Zhihu Inc ADR

Shorepower Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shorepower Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Shorepower Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

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 Shorepower Technologies and Zhihu

The main advantage of trading using opposite Shorepower Technologies and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shorepower Technologies 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 Shorepower Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.