Correlation Between Zhihu and AMREP

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

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

Diversification Opportunities for Zhihu and AMREP

-0.06

Correlation Coefficient

Zhihu  AMREP

Good diversification

The 3 months correlation between Zhihu and AMREP is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Zhihu 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 Zhihu Inc ADR are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Zhihu i.e., Zhihu and AMREP go up and down completely randomly.

Pair Corralation between Zhihu and AMREP

Allowing for the 90-day total investment horizon Zhihu is expected to generate 4.61 times less return on investment than AMREP. But when comparing it to its historical volatility, Zhihu Inc ADR is 1.26 times less risky than AMREP. It trades about 0.02 of its potential returns per unit of risk. AMREP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,830  in AMREP on September 24, 2024 and sell it today you would earn a total of  361.00  from holding AMREP or generate 12.76% return on investment over 90 days.

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

Zhihu Inc ADR  vs.  AMREP

Zhihu Inc ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Zhihu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AMREP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AMREP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zhihu and AMREP

The main advantage of trading using opposite Zhihu and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.

The idea behind Zhihu Inc ADR and AMREP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.