Correlation Between Asset Entities and Zhihu
Can any of the company-specific risk be diversified away by investing in both Asset Entities 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 Asset Entities and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asset Entities Class and Zhihu Inc ADR, you can compare the effects of market volatilities on Asset Entities 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 Asset Entities with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asset Entities and Zhihu.
Diversification Opportunities for Asset Entities and Zhihu
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asset and Zhihu is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Asset Entities Class 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 Asset Entities 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 Asset Entities Class 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 Asset Entities i.e., Asset Entities and Zhihu go up and down completely randomly.
Pair Corralation between Asset Entities and Zhihu
Given the investment horizon of 90 days Asset Entities Class is expected to under-perform the Zhihu. In addition to that, Asset Entities is 1.38 times more volatile than Zhihu Inc ADR. It trades about -0.38 of its total potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.01 per unit of volatility. If you would invest 369.00 in Zhihu Inc ADR on August 27, 2024 and sell it today you would lose (1.00) from holding Zhihu Inc ADR or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asset Entities Class vs. Zhihu Inc ADR
Performance |
| Timeline |
| Asset Entities Class |
| Zhihu Inc ADR |
Asset Entities and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asset Entities and Zhihu
The main advantage of trading using opposite Asset Entities and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asset Entities 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.| Asset Entities vs. Trivago NV | Asset Entities vs. Cheetah Mobile | Asset Entities vs. Comscore | Asset Entities vs. Arena 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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