Correlation Between Summit Midstream and Zhihu
Can any of the company-specific risk be diversified away by investing in both Summit Midstream 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 Summit Midstream and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Midstream and Zhihu Inc ADR, you can compare the effects of market volatilities on Summit Midstream 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 Summit Midstream with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Midstream and Zhihu.
Diversification Opportunities for Summit Midstream and Zhihu
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and Zhihu is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream 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 Summit Midstream 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 Summit Midstream 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 Summit Midstream i.e., Summit Midstream and Zhihu go up and down completely randomly.
Pair Corralation between Summit Midstream and Zhihu
Considering the 90-day investment horizon Summit Midstream is expected to generate 0.4 times more return on investment than Zhihu. However, Summit Midstream is 2.53 times less risky than Zhihu. It trades about 0.35 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.12 per unit of risk. If you would invest 3,288 in Summit Midstream on September 5, 2024 and sell it today you would earn a total of 442.00 from holding Summit Midstream or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Midstream vs. Zhihu Inc ADR
Performance |
| Timeline |
| Summit Midstream |
| Zhihu Inc ADR |
Summit Midstream and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Midstream and Zhihu
The main advantage of trading using opposite Summit Midstream and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Midstream 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.| Summit Midstream vs. Zhihu Inc ADR | Summit Midstream vs. Space Communication | Summit Midstream vs. BCE Inc | Summit Midstream vs. Barrick Gold Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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