Correlation Between Zhihu and Elutia

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

Diversification Opportunities for Zhihu and Elutia

0.18

Correlation Coefficient

Zhihu  Elutia

Average diversification

The 3 months correlation between Zhihu and Elutia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Elutia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elutia Inc 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 Elutia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elutia Inc has no effect on the direction of Zhihu i.e., Zhihu and Elutia go up and down completely randomly.

Pair Corralation between Zhihu and Elutia

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Elutia. But the stock apears to be less risky and, when comparing its historical volatility, Zhihu Inc ADR is 1.58 times less risky than Elutia. The stock trades about -0.03 of its potential returns per unit of risk. The Elutia Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Elutia Inc on October 11, 2024 and sell it today you would lose (60.00) from holding Elutia Inc or give up 15.0% of portfolio value over 90 days.

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

Zhihu Inc ADR  vs.  Elutia Inc

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.

Elutia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elutia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Elutia is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zhihu and Elutia

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

The idea behind Zhihu Inc ADR and Elutia Inc 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 CEOs Directory module to screen CEOs from public companies around the world.