Correlation Between Transocean and Zhihu
Can any of the company-specific risk be diversified away by investing in both Transocean 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 Transocean and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transocean and Zhihu Inc ADR, you can compare the effects of market volatilities on Transocean 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 Transocean with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and Zhihu.
Diversification Opportunities for Transocean and Zhihu
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transocean and Zhihu is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Transocean 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 Transocean 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 Transocean 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 Transocean i.e., Transocean and Zhihu go up and down completely randomly.
Pair Corralation between Transocean and Zhihu
Considering the 90-day investment horizon Transocean is expected to under-perform the Zhihu. But the stock apears to be less risky and, when comparing its historical volatility, Transocean is 1.55 times less risky than Zhihu. The stock trades about -0.01 of its potential returns per unit of risk. The Zhihu Inc ADR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 341.00 in Zhihu Inc ADR on September 4, 2024 and sell it today you would earn a total of 29.00 from holding Zhihu Inc ADR or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transocean vs. Zhihu Inc ADR
Performance |
| Timeline |
| Transocean |
| Zhihu Inc ADR |
Transocean and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transocean and Zhihu
The main advantage of trading using opposite Transocean and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean 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.| Transocean vs. Precision Drilling | Transocean vs. Sable Offshore Corp | Transocean vs. Patterson UTI Energy | Transocean vs. Seadrill Limited |
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 CEOs Directory module to screen CEOs from public companies around the world.
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