Correlation Between Zhihu and Champion Gaming

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

Diversification Opportunities for Zhihu and Champion Gaming

-0.44

Correlation Coefficient

Zhihu  Champion Gaming

Very good diversification

The 3 months correlation between Zhihu and Champion is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Champion Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Gaming Group 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 Champion Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Gaming Group has no effect on the direction of Zhihu i.e., Zhihu and Champion Gaming go up and down completely randomly.

Pair Corralation between Zhihu and Champion Gaming

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.38 times more return on investment than Champion Gaming. However, Zhihu Inc ADR is 2.6 times less risky than Champion Gaming. It trades about 0.1 of its potential returns per unit of risk. Champion Gaming Group is currently generating about -0.13 per unit of risk. If you would invest  360.00  in Zhihu Inc ADR on December 20, 2024 and sell it today you would earn a total of  87.00  from holding Zhihu Inc ADR or generate 24.17% return on investment over 90 days.

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

Zhihu Inc ADR  vs.  Champion Gaming Group

Zhihu Inc ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 7 (%) 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.

Champion Gaming Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champion Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Zhihu and Champion Gaming

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

The idea behind Zhihu Inc ADR and Champion Gaming Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.