Correlation Between Q2 Holdings and Zhihu
Can any of the company-specific risk be diversified away by investing in both Q2 Holdings 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 Q2 Holdings and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Q2 Holdings and Zhihu Inc ADR, you can compare the effects of market volatilities on Q2 Holdings 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 Q2 Holdings with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2 Holdings and Zhihu.
Diversification Opportunities for Q2 Holdings and Zhihu
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between QTWO and Zhihu is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Q2 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 Q2 Holdings 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 Q2 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 Q2 Holdings i.e., Q2 Holdings and Zhihu go up and down completely randomly.
Pair Corralation between Q2 Holdings and Zhihu
Given the investment horizon of 90 days Q2 Holdings is expected to generate 0.63 times more return on investment than Zhihu. However, Q2 Holdings is 1.6 times less risky than Zhihu. It trades about 0.18 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.03 per unit of risk. If you would invest 3,360 in Q2 Holdings on September 1, 2024 and sell it today you would earn a total of 7,114 from holding Q2 Holdings or generate 211.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Q2 Holdings vs. Zhihu Inc ADR
Performance |
| Timeline |
| Q2 Holdings |
| Zhihu Inc ADR |
Q2 Holdings and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Q2 Holdings and Zhihu
The main advantage of trading using opposite Q2 Holdings and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q2 Holdings 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.| Q2 Holdings vs. Ke Holdings | Q2 Holdings vs. nCino Inc | Q2 Holdings vs. Kingsoft Cloud Holdings | Q2 Holdings vs. Jfrog |
| Zhihu vs. Tencent Music Entertainment | Zhihu vs. Weibo Corp | Zhihu vs. DouYu International Holdings | Zhihu vs. Baidu Inc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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