Correlation Between Tandy Leather and Zhihu
Can any of the company-specific risk be diversified away by investing in both Tandy Leather 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 Tandy Leather and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tandy Leather Factory and Zhihu Inc ADR, you can compare the effects of market volatilities on Tandy Leather 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 Tandy Leather with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandy Leather and Zhihu.
Diversification Opportunities for Tandy Leather and Zhihu
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tandy and Zhihu is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory 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 Tandy Leather 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 Tandy Leather Factory 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 Tandy Leather i.e., Tandy Leather and Zhihu go up and down completely randomly.
Pair Corralation between Tandy Leather and Zhihu
Considering the 90-day investment horizon Tandy Leather Factory is expected to generate 0.69 times more return on investment than Zhihu. However, Tandy Leather Factory is 1.45 times less risky than Zhihu. It trades about 0.03 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 448.00 in Tandy Leather Factory on November 3, 2024 and sell it today you would earn a total of 39.00 from holding Tandy Leather Factory or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Tandy Leather Factory vs. Zhihu Inc ADR
Performance |
| Timeline |
| Tandy Leather Factory |
| Zhihu Inc ADR |
Tandy Leather and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tandy Leather and Zhihu
The main advantage of trading using opposite Tandy Leather and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandy Leather 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.| Tandy Leather vs. Ceconomy AG ADR | Tandy Leather vs. Winmark | Tandy Leather vs. ODP Corp | Tandy Leather vs. National Vision Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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