Correlation Between Zhihu and Liberty Tri

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

Diversification Opportunities for Zhihu and Liberty Tri

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Zhihu and Liberty Tri

If you would invest  359.00  in Zhihu Inc ADR on November 29, 2024 and sell it today you would earn a total of  181.00  from holding Zhihu Inc ADR or generate 50.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Zhihu Inc ADR  vs.  Liberty Tri

 Performance 
       Timeline  
Zhihu Inc ADR 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Zhihu demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Liberty Tri 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Liberty Tri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Liberty Tri is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhihu and Liberty Tri Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhihu and Liberty Tri

The main advantage of trading using opposite Zhihu and Liberty Tri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Liberty Tri 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 Liberty Tri will offset losses from the drop in Liberty Tri's long position.
The idea behind Zhihu Inc ADR and Liberty Tri 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.
Check out your portfolio center.
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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