Correlation Between Aris Water and Zhihu
Can any of the company-specific risk be diversified away by investing in both Aris Water 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 Aris Water and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aris Water Solutions and Zhihu Inc ADR, you can compare the effects of market volatilities on Aris Water 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 Aris Water with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aris Water and Zhihu.
Diversification Opportunities for Aris Water and Zhihu
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aris and Zhihu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aris Water Solutions 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 Aris Water 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 Aris Water Solutions 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 Aris Water i.e., Aris Water and Zhihu go up and down completely randomly.
Pair Corralation between Aris Water and Zhihu
Given the investment horizon of 90 days Aris Water Solutions is expected to generate 1.05 times more return on investment than Zhihu. However, Aris Water is 1.05 times more volatile than Zhihu Inc ADR. It trades about 0.21 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.09 per unit of risk. If you would invest 1,591 in Aris Water Solutions on August 31, 2024 and sell it today you would earn a total of 1,095 from holding Aris Water Solutions or generate 68.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aris Water Solutions vs. Zhihu Inc ADR
Performance |
| Timeline |
| Aris Water Solutions |
| Zhihu Inc ADR |
Aris Water and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aris Water and Zhihu
The main advantage of trading using opposite Aris Water and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aris Water 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.| Aris Water vs. Middlesex Water | Aris Water vs. California Water Service | Aris Water vs. Global Water Resources | Aris Water vs. American States Water |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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