Correlation Between Montana Technologies and Zhihu
Can any of the company-specific risk be diversified away by investing in both Montana Technologies and Zhihu 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 Montana Technologies and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montana Technologies and Zhihu Inc ADR, you can compare the effects of market volatilities on Montana Technologies and Zhihu 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 Montana Technologies with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montana Technologies and Zhihu.
Diversification Opportunities for Montana Technologies and Zhihu
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Montana and Zhihu is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and Zhihu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhihu Inc ADR and Montana Technologies 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 Montana Technologies are associated (or correlated) with Zhihu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhihu Inc ADR has no effect on the direction of Montana Technologies i.e., Montana Technologies and Zhihu go up and down completely randomly.
Pair Corralation between Montana Technologies and Zhihu
Given the investment horizon of 90 days Montana Technologies is expected to generate 1.06 times more return on investment than Zhihu. However, Montana Technologies is 1.06 times more volatile than Zhihu Inc ADR. It trades about 0.23 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.11 per unit of risk. If you would invest 581.00 in Montana Technologies on September 5, 2024 and sell it today you would earn a total of 252.00 from holding Montana Technologies or generate 43.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Montana Technologies vs. Zhihu Inc ADR
Performance |
| Timeline |
| Montana Technologies |
| Zhihu Inc ADR |
Montana Technologies and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montana Technologies and Zhihu
The main advantage of trading using opposite Montana Technologies and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montana Technologies position performs unexpectedly, Zhihu 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 Zhihu will offset losses from the drop in Zhihu's long position.| Montana Technologies vs. Zhihu Inc ADR | Montana Technologies vs. Inflection Point Acquisition | Montana Technologies vs. Weibo Corp | Montana Technologies vs. Western Acquisition Ventures |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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