Correlation Between Universal and Zhihu
Can any of the company-specific risk be diversified away by investing in both Universal 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 Universal and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Zhihu Inc ADR, you can compare the effects of market volatilities on Universal 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 Universal with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Zhihu.
Diversification Opportunities for Universal and Zhihu
Good diversification
The 3 months correlation between Universal and Zhihu is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Universal 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 Universal 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 Universal 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 Universal i.e., Universal and Zhihu go up and down completely randomly.
Pair Corralation between Universal and Zhihu
Considering the 90-day investment horizon Universal is expected to generate 0.43 times more return on investment than Zhihu. However, Universal is 2.31 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 0.0 per unit of risk. If you would invest 5,149 in Universal on September 3, 2024 and sell it today you would earn a total of 563.00 from holding Universal or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. Zhihu Inc ADR
Performance |
| Timeline |
| Universal |
| Zhihu Inc ADR |
Universal and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Zhihu
The main advantage of trading using opposite Universal and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal 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.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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