Correlation Between Arena Group and Zhihu
Can any of the company-specific risk be diversified away by investing in both Arena Group 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 Arena Group and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arena Group Holdings and Zhihu Inc ADR, you can compare the effects of market volatilities on Arena Group 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 Arena Group with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arena Group and Zhihu.
Diversification Opportunities for Arena Group and Zhihu
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Arena and Zhihu is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Arena Group Holdings 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 Arena Group 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 Arena Group Holdings 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 Arena Group i.e., Arena Group and Zhihu go up and down completely randomly.
Pair Corralation between Arena Group and Zhihu
Given the investment horizon of 90 days Arena Group Holdings is expected to generate 3.34 times more return on investment than Zhihu. However, Arena Group is 3.34 times more volatile than Zhihu Inc ADR. It trades about 0.02 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.02 per unit of risk. If you would invest 345.00 in Arena Group Holdings on August 31, 2024 and sell it today you would lose (195.00) from holding Arena Group Holdings or give up 56.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arena Group Holdings vs. Zhihu Inc ADR
Performance |
| Timeline |
| Arena Group Holdings |
| Zhihu Inc ADR |
Arena Group and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arena Group and Zhihu
The main advantage of trading using opposite Arena Group and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arena Group 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.| Arena Group vs. Cerberus Cyber Sentinel | Arena Group vs. Alta Equipment Group | Arena Group vs. AN2 Therapeutics | Arena Group vs. KORE Group Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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