Correlation Between Life Time and Zhihu
Can any of the company-specific risk be diversified away by investing in both Life Time 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 Life Time and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Zhihu Inc ADR, you can compare the effects of market volatilities on Life Time 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 Life Time with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Zhihu.
Diversification Opportunities for Life Time and Zhihu
Average diversification
The 3 months correlation between Life and Zhihu is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group 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 Life Time 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 Life Time Group 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 Life Time i.e., Life Time and Zhihu go up and down completely randomly.
Pair Corralation between Life Time and Zhihu
Considering the 90-day investment horizon Life Time Group is expected to generate 0.6 times more return on investment than Zhihu. However, Life Time Group is 1.66 times less risky than Zhihu. It trades about 0.13 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.01 per unit of risk. If you would invest 1,511 in Life Time Group on September 3, 2024 and sell it today you would earn a total of 916.00 from holding Life Time Group or generate 60.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Zhihu Inc ADR
Performance |
| Timeline |
| Life Time Group |
| Zhihu Inc ADR |
Life Time and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Zhihu
The main advantage of trading using opposite Life Time and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time 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.| Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Mattel Inc | Life Time vs. OneSpaWorld 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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