Correlation Between AKITA Drilling and Zhihu
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling 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 AKITA Drilling and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Zhihu Inc ADR, you can compare the effects of market volatilities on AKITA Drilling 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 AKITA Drilling with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Zhihu.
Diversification Opportunities for AKITA Drilling and Zhihu
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AKITA and Zhihu is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling 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 AKITA Drilling 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 AKITA Drilling 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 AKITA Drilling i.e., AKITA Drilling and Zhihu go up and down completely randomly.
Pair Corralation between AKITA Drilling and Zhihu
Assuming the 90 days horizon AKITA Drilling is expected to generate 3.16 times less return on investment than Zhihu. But when comparing it to its historical volatility, AKITA Drilling is 2.38 times less risky than Zhihu. It trades about 0.05 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 366.00 in Zhihu Inc ADR on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Zhihu Inc ADR or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Zhihu Inc ADR
Performance |
| Timeline |
| AKITA Drilling |
| Zhihu Inc ADR |
AKITA Drilling and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Zhihu
The main advantage of trading using opposite AKITA Drilling and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling 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.| AKITA Drilling vs. Yamaha Motor Co | AKITA Drilling vs. Nitto Denko Corp | AKITA Drilling vs. Farmers Merchants Bancorp | AKITA Drilling vs. Furukawa Electric Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |