Correlation Between Zhihu and Gatos Silver

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

Diversification Opportunities for Zhihu and Gatos Silver

0.04

Correlation Coefficient

Zhihu  Gatos Silver

Significant diversification

The 3 months correlation between Zhihu and Gatos is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver 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 Gatos Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatos Silver has no effect on the direction of Zhihu i.e., Zhihu and Gatos Silver go up and down completely randomly.

Pair Corralation between Zhihu and Gatos Silver

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Gatos Silver. But the stock apears to be less risky and, when comparing its historical volatility, Zhihu Inc ADR is 1.68 times less risky than Gatos Silver. The stock trades about -0.17 of its potential returns per unit of risk. The Gatos Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,414  in Gatos Silver on October 25, 2024 and sell it today you would earn a total of  26.00  from holding Gatos Silver or generate 1.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

Zhihu Inc ADR  vs.  Gatos Silver

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 fairly strong technical indicators, Zhihu is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Gatos Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gatos Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Zhihu and Gatos Silver

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

The idea behind Zhihu Inc ADR and Gatos Silver 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.