Correlation Between Sphere Entertainment and Zhihu
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment 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 Sphere Entertainment and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sphere Entertainment Co and Zhihu Inc ADR, you can compare the effects of market volatilities on Sphere Entertainment 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 Sphere Entertainment with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Zhihu.
Diversification Opportunities for Sphere Entertainment and Zhihu
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sphere and Zhihu is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co 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 Sphere Entertainment 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 Sphere Entertainment Co 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 Sphere Entertainment i.e., Sphere Entertainment and Zhihu go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Zhihu
Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.78 times more return on investment than Zhihu. However, Sphere Entertainment Co is 1.28 times less risky than Zhihu. It trades about 0.05 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 3,528 in Sphere Entertainment Co on August 25, 2024 and sell it today you would earn a total of 501.00 from holding Sphere Entertainment Co or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Zhihu Inc ADR
Performance |
| Timeline |
| Sphere Entertainment |
| Zhihu Inc ADR |
Sphere Entertainment and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Zhihu
The main advantage of trading using opposite Sphere Entertainment and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment 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.| Sphere Entertainment vs. Toro Co | Sphere Entertainment vs. Aerofoam Metals | Sphere Entertainment vs. Eastern Co | Sphere Entertainment vs. Acco Brands |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |