Correlation Between Definitive Healthcare and Zhihu
Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare 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 Definitive Healthcare and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definitive Healthcare Corp and Zhihu Inc ADR, you can compare the effects of market volatilities on Definitive Healthcare 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 Definitive Healthcare with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and Zhihu.
Diversification Opportunities for Definitive Healthcare and Zhihu
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Definitive and Zhihu is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare 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 Definitive Healthcare 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 Definitive Healthcare 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 Definitive Healthcare i.e., Definitive Healthcare and Zhihu go up and down completely randomly.
Pair Corralation between Definitive Healthcare and Zhihu
Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 2.25 times more return on investment than Zhihu. However, Definitive Healthcare is 2.25 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 423.00 in Definitive Healthcare Corp on November 9, 2024 and sell it today you would earn a total of 81.00 from holding Definitive Healthcare Corp or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definitive Healthcare Corp vs. Zhihu Inc ADR
Performance |
| Timeline |
| Definitive Healthcare |
| Zhihu Inc ADR |
Definitive Healthcare and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definitive Healthcare and Zhihu
The main advantage of trading using opposite Definitive Healthcare and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare 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.| Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Evolent Health | Definitive Healthcare vs. Simulations Plus | Definitive Healthcare vs. Privia Health Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |