Correlation Between Zhihu and Color Star
Can any of the company-specific risk be diversified away by investing in both Zhihu and Color Star 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 Zhihu and Color Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhihu Inc ADR and Color Star Technology, you can compare the effects of market volatilities on Zhihu and Color Star 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 Zhihu with a short position of Color Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Color Star.
Diversification Opportunities for Zhihu and Color Star
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhihu and Color is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Color Star Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Color Star Technology and Zhihu 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 Zhihu Inc ADR are associated (or correlated) with Color Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Color Star Technology has no effect on the direction of Zhihu i.e., Zhihu and Color Star go up and down completely randomly.
Pair Corralation between Zhihu and Color Star
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.32 times more return on investment than Color Star. However, Zhihu Inc ADR is 3.08 times less risky than Color Star. It trades about 0.07 of its potential returns per unit of risk. Color Star Technology is currently generating about -0.42 per unit of risk. If you would invest 366.00 in Zhihu Inc ADR on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Zhihu Inc ADR or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Color Star Technology
Performance |
| Timeline |
| Zhihu Inc ADR |
| Color Star Technology |
Zhihu and Color Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Color Star
The main advantage of trading using opposite Zhihu and Color Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Color Star 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 Color Star will offset losses from the drop in Color Star's long position.The idea behind Zhihu Inc ADR and Color Star Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Color Star vs. Guild Esports Plc | Color Star vs. New Wave Holdings | Color Star vs. Network Media Group | Color Star vs. Hall of Fame |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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