Correlation Between Zhihu and BingEx

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

Diversification Opportunities for Zhihu and BingEx

-0.23

Correlation Coefficient

Zhihu  BingEx

Very good diversification

The 3 months correlation between Zhihu and BingEx is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and BingEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BingEx 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 BingEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BingEx has no effect on the direction of Zhihu i.e., Zhihu and BingEx go up and down completely randomly.

Pair Corralation between Zhihu and BingEx

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the BingEx. But the stock apears to be less risky and, when comparing its historical volatility, Zhihu Inc ADR is 2.37 times less risky than BingEx. The stock trades about -0.36 of its potential returns per unit of risk. The BingEx is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  936.00  in BingEx on October 11, 2024 and sell it today you would lose (141.00) from holding BingEx or give up 15.06% of portfolio value over 90 days.

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

Zhihu Inc ADR  vs.  BingEx

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.

BingEx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BingEx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zhihu and BingEx

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

The idea behind Zhihu Inc ADR and BingEx 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.