Correlation Between CDW Corp and Zhihu
Can any of the company-specific risk be diversified away by investing in both CDW Corp 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 CDW Corp and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Zhihu Inc ADR, you can compare the effects of market volatilities on CDW Corp 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 CDW Corp with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Zhihu.
Diversification Opportunities for CDW Corp and Zhihu
Excellent diversification
The 3 months correlation between CDW and Zhihu is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp 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 CDW Corp 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 CDW Corp 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 CDW Corp i.e., CDW Corp and Zhihu go up and down completely randomly.
Pair Corralation between CDW Corp and Zhihu
Considering the 90-day investment horizon CDW Corp is expected to generate 0.69 times more return on investment than Zhihu. However, CDW Corp is 1.44 times less risky than Zhihu. It trades about 0.34 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 18,134 in CDW Corp on November 9, 2024 and sell it today you would earn a total of 1,852 from holding CDW Corp or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Zhihu Inc ADR
Performance |
| Timeline |
| CDW Corp |
| Zhihu Inc ADR |
CDW Corp and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Zhihu
The main advantage of trading using opposite CDW Corp and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp 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.| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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