Correlation Between Zhihu and NetMed

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

Diversification Opportunities for Zhihu and NetMed

0.0

Correlation Coefficient

Zhihu  NetMed

Pay attention - limited upside

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

Pair Corralation between Zhihu and NetMed

If you would invest  371.00  in Zhihu Inc ADR on December 27, 2024 and sell it today you would earn a total of  94.00  from holding Zhihu Inc ADR or generate 25.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Zhihu Inc ADR  vs.  NetMed Inc

Zhihu Inc ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 8 (%) 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.

NetMed Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NetMed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, NetMed is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zhihu and NetMed

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

The idea behind Zhihu Inc ADR and NetMed 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.