Correlation Between Zhihu and Primerica

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

Diversification Opportunities for Zhihu and Primerica

-0.36

Correlation Coefficient

Zhihu  Primerica

Very good diversification

The 3 months correlation between Zhihu and Primerica is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Primerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primerica 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 Primerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primerica has no effect on the direction of Zhihu i.e., Zhihu and Primerica go up and down completely randomly.

Pair Corralation between Zhihu and Primerica

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 2.36 times more return on investment than Primerica. However, Zhihu is 2.36 times more volatile than Primerica. It trades about 0.02 of its potential returns per unit of risk. Primerica is currently generating about 0.01 per unit of risk. If you would invest  355.00  in Zhihu Inc ADR on October 6, 2024 and sell it today you would earn a total of  2.00  from holding Zhihu Inc ADR or generate 0.56% return on investment over 90 days.

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

Zhihu Inc ADR  vs.  Primerica

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 abnormal 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.

Primerica

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Primerica is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Zhihu and Primerica

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

The idea behind Zhihu Inc ADR and Primerica 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 Transaction History module to view history of all your transactions and understand their impact on performance.