Correlation Between SmartStop Self and Zhihu

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

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

Diversification Opportunities for SmartStop Self and Zhihu

-0.04

Correlation Coefficient

SmartStop Self  Zhihu

Good diversification

The 3 months correlation between SmartStop and Zhihu is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SmartStop Self Storage 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 SmartStop Self 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 SmartStop Self Storage 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 SmartStop Self i.e., SmartStop Self and Zhihu go up and down completely randomly.

Pair Corralation between SmartStop Self and Zhihu

Assuming the 90 days horizon SmartStop Self Storage is expected to generate 43.37 times more return on investment than Zhihu. However, SmartStop Self is 43.37 times more volatile than Zhihu Inc ADR. It trades about 0.2 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.08 per unit of risk. If you would invest  3,560  in SmartStop Self Storage on December 29, 2024 and sell it today you would lose (244.00) from holding SmartStop Self Storage or give up 6.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

SmartStop Self Storage  vs.  Zhihu Inc ADR

SmartStop Self Storage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, SmartStop Self reported solid returns over the last few months and may actually be approaching a breakup point.

Zhihu Inc ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 6 (%) 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 SmartStop Self and Zhihu

The main advantage of trading using opposite SmartStop Self and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartStop Self 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 SmartStop Self Storage 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.