Correlation Between 694308KD8 and Zhihu

Can any of the company-specific risk be diversified away by investing in both 694308KD8 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 694308KD8 and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCG 525 01 MAR 52 and Zhihu Inc ADR, you can compare the effects of market volatilities on 694308KD8 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 694308KD8 with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of 694308KD8 and Zhihu.

Diversification Opportunities for 694308KD8 and Zhihu

0.09

Correlation Coefficient

694308KD8  Zhihu

Significant diversification

The 3 months correlation between 694308KD8 and Zhihu is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PCG 525 01 MAR 52 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 694308KD8 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 PCG 525 01 MAR 52 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 694308KD8 i.e., 694308KD8 and Zhihu go up and down completely randomly.

Pair Corralation between 694308KD8 and Zhihu

Assuming the 90 days trading horizon PCG 525 01 MAR 52 is expected to generate 0.58 times more return on investment than Zhihu. However, PCG 525 01 MAR 52 is 1.73 times less risky than Zhihu. It trades about -0.1 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.14 per unit of risk. If you would invest  9,393  in PCG 525 01 MAR 52 on October 5, 2024 and sell it today you would lose (204.00) from holding PCG 525 01 MAR 52 or give up 2.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

PCG 525 01 MAR 52  vs.  Zhihu Inc ADR

PCG 525 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 525 01 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308KD8 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 unfluctuating performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with 694308KD8 and Zhihu

The main advantage of trading using opposite 694308KD8 and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 694308KD8 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 PCG 525 01 MAR 52 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..