Correlation Between Rail Vision and Zhihu
Can any of the company-specific risk be diversified away by investing in both Rail Vision 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 Rail Vision and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rail Vision Ltd and Zhihu Inc ADR, you can compare the effects of market volatilities on Rail Vision 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 Rail Vision with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rail Vision and Zhihu.
Diversification Opportunities for Rail Vision and Zhihu
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rail and Zhihu is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rail Vision Ltd 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 Rail Vision 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 Rail Vision Ltd 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 Rail Vision i.e., Rail Vision and Zhihu go up and down completely randomly.
Pair Corralation between Rail Vision and Zhihu
Assuming the 90 days horizon Rail Vision Ltd is expected to generate 26.3 times more return on investment than Zhihu. However, Rail Vision is 26.3 times more volatile than Zhihu Inc ADR. It trades about 0.14 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 6.99 in Rail Vision Ltd on September 20, 2024 and sell it today you would earn a total of 0.01 from holding Rail Vision Ltd or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.13% |
| Values | Daily Returns |
Rail Vision Ltd vs. Zhihu Inc ADR
Performance |
| Timeline |
| Rail Vision |
| Zhihu Inc ADR |
Rail Vision and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rail Vision and Zhihu
The main advantage of trading using opposite Rail Vision and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rail Vision 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.The idea behind Rail Vision Ltd and Zhihu Inc ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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