Correlation Between Zhihu and Caspian Services

Can any of the company-specific risk be diversified away by investing in both Zhihu and Caspian Services 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 Caspian Services 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 Caspian Services, you can compare the effects of market volatilities on Zhihu and Caspian Services 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 Caspian Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Caspian Services.

Diversification Opportunities for Zhihu and Caspian Services

0.0

Correlation Coefficient

Zhihu  Caspian Services

Pay attention - limited upside

The 3 months correlation between Zhihu and Caspian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Caspian Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Services 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 Caspian Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Services has no effect on the direction of Zhihu i.e., Zhihu and Caspian Services go up and down completely randomly.

Pair Corralation between Zhihu and Caspian Services

If you would invest  335.00  in Zhihu Inc ADR on October 9, 2024 and sell it today you would earn a total of  19.00  from holding Zhihu Inc ADR or generate 5.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.5%
Values	Daily Returns

Zhihu Inc ADR  vs.  Caspian Services

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 latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Caspian Services

Risk-Adjusted Performance

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OK

Over the last 90 days Caspian Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Caspian Services is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Zhihu and Caspian Services

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

The idea behind Zhihu Inc ADR and Caspian Services 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.