Correlation Between Cheetah Mobile and Zhihu
Can any of the company-specific risk be diversified away by investing in both Cheetah Mobile 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 Cheetah Mobile and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheetah Mobile and Zhihu Inc ADR, you can compare the effects of market volatilities on Cheetah Mobile 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 Cheetah Mobile with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheetah Mobile and Zhihu.
Diversification Opportunities for Cheetah Mobile and Zhihu
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheetah and Zhihu is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile 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 Cheetah Mobile 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 Cheetah Mobile 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 Cheetah Mobile i.e., Cheetah Mobile and Zhihu go up and down completely randomly.
Pair Corralation between Cheetah Mobile and Zhihu
Given the investment horizon of 90 days Cheetah Mobile is expected to generate 1.25 times more return on investment than Zhihu. However, Cheetah Mobile is 1.25 times more volatile than Zhihu Inc ADR. It trades about 0.08 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 212.00 in Cheetah Mobile on August 31, 2024 and sell it today you would earn a total of 366.00 from holding Cheetah Mobile or generate 172.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheetah Mobile vs. Zhihu Inc ADR
Performance |
| Timeline |
| Cheetah Mobile |
| Zhihu Inc ADR |
Cheetah Mobile and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheetah Mobile and Zhihu
The main advantage of trading using opposite Cheetah Mobile and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheetah Mobile 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.| Cheetah Mobile vs. Tuniu Corp | Cheetah Mobile vs. Yirendai | Cheetah Mobile vs. Xunlei Ltd Adr | Cheetah Mobile vs. Phoenix New Media |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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