Correlation Between Getty Images and Zhihu
Can any of the company-specific risk be diversified away by investing in both Getty Images 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 Getty Images and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Getty Images Holdings and Zhihu Inc ADR, you can compare the effects of market volatilities on Getty Images 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 Getty Images with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getty Images and Zhihu.
Diversification Opportunities for Getty Images and Zhihu
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Getty and Zhihu is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Getty Images Holdings 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 Getty Images 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 Getty Images Holdings 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 Getty Images i.e., Getty Images and Zhihu go up and down completely randomly.
Pair Corralation between Getty Images and Zhihu
Given the investment horizon of 90 days Getty Images Holdings is expected to under-perform the Zhihu. But the stock apears to be less risky and, when comparing its historical volatility, Getty Images Holdings is 1.01 times less risky than Zhihu. The stock trades about -0.03 of its potential returns per unit of risk. The Zhihu Inc ADR is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 648.00 in Zhihu Inc ADR on August 31, 2024 and sell it today you would lose (289.00) from holding Zhihu Inc ADR or give up 44.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Getty Images Holdings vs. Zhihu Inc ADR
Performance |
| Timeline |
| Getty Images Holdings |
| Zhihu Inc ADR |
Getty Images and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Getty Images and Zhihu
The main advantage of trading using opposite Getty Images and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Images 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.| Getty Images vs. Twilio Inc | Getty Images vs. Baidu Inc | Getty Images vs. Snap Inc | Getty Images vs. ANGI Homeservices |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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