Correlation Between Zhihu and 209111GE7

Can any of the company-specific risk be diversified away by investing in both Zhihu and 209111GE7 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 209111GE7 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 ED 52 01 MAR 33, you can compare the effects of market volatilities on Zhihu and 209111GE7 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 209111GE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and 209111GE7.

Diversification Opportunities for Zhihu and 209111GE7

0.21

Correlation Coefficient

Zhihu  209111GE7

Modest diversification

The 3 months correlation between Zhihu and 209111GE7 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and ED 52 01 MAR 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 209111GE7 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 209111GE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 209111GE7 has no effect on the direction of Zhihu i.e., Zhihu and 209111GE7 go up and down completely randomly.

Pair Corralation between Zhihu and 209111GE7

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 4.39 times more return on investment than 209111GE7. However, Zhihu is 4.39 times more volatile than ED 52 01 MAR 33. It trades about 0.02 of its potential returns per unit of risk. ED 52 01 MAR 33 is currently generating about 0.0 per unit of risk. If you would invest  325.00  in Zhihu Inc ADR on October 25, 2024 and sell it today you would earn a total of  11.00  from holding Zhihu Inc ADR or generate 3.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.87%
Values	Daily Returns

Zhihu Inc ADR  vs.  ED 52 01 MAR 33

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.

209111GE7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ED 52 01 MAR 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 209111GE7 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhihu and 209111GE7

The main advantage of trading using opposite Zhihu and 209111GE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, 209111GE7 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 209111GE7 will offset losses from the drop in 209111GE7's long position.

The idea behind Zhihu Inc ADR and ED 52 01 MAR 33 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.