Correlation Between ZBAI and Zhihu
Can any of the company-specific risk be diversified away by investing in both ZBAI 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 ZBAI and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZBAI and Zhihu Inc ADR, you can compare the effects of market volatilities on ZBAI 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 ZBAI with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZBAI and Zhihu.
Diversification Opportunities for ZBAI and Zhihu
Very good diversification
The 3 months correlation between ZBAI and Zhihu is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ZBAI 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 ZBAI 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 ZBAI 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 ZBAI i.e., ZBAI and Zhihu go up and down completely randomly.
Pair Corralation between ZBAI and Zhihu
Given the investment horizon of 90 days ZBAI is expected to generate 7.5 times more return on investment than Zhihu. However, ZBAI is 7.5 times more volatile than Zhihu Inc ADR. It trades about 0.31 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.24 per unit of risk. If you would invest 93.00 in ZBAI on October 24, 2024 and sell it today you would earn a total of 75.00 from holding ZBAI or generate 80.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZBAI vs. Zhihu Inc ADR
Performance |
| Timeline |
| ZBAI |
| Zhihu Inc ADR |
ZBAI and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZBAI and Zhihu
The main advantage of trading using opposite ZBAI and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZBAI 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.| ZBAI vs. Zhihu Inc ADR | ZBAI vs. Summit Hotel Properties | ZBAI vs. Futuretech II Acquisition | ZBAI vs. Cadence Design Systems |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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