Correlation Between Zhihu and UNITEDHEALTH

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

Diversification Opportunities for Zhihu and UNITEDHEALTH

0.31

Correlation Coefficient

Zhihu  UNITEDHEALTH

Weak diversification

The 3 months correlation between Zhihu and UNITEDHEALTH is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and UNITEDHEALTH GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITEDHEALTH GROUP 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 UNITEDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITEDHEALTH GROUP INC has no effect on the direction of Zhihu i.e., Zhihu and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Zhihu and UNITEDHEALTH

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.99 times more return on investment than UNITEDHEALTH. However, Zhihu Inc ADR is 1.01 times less risky than UNITEDHEALTH. It trades about 0.03 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.0 per unit of risk. If you would invest  360.00  in Zhihu Inc ADR on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Zhihu Inc ADR or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

Zhihu Inc ADR  vs.  UNITEDHEALTH GROUP INC

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.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITEDHEALTH GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for UNITEDHEALTH GROUP INC investors.

Pair Trading with Zhihu and UNITEDHEALTH

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

The idea behind Zhihu Inc ADR and UNITEDHEALTH GROUP 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..