Correlation Between Zhihu and Asset Entities
Can any of the company-specific risk be diversified away by investing in both Zhihu and Asset Entities 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 Asset Entities 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 Asset Entities Class, you can compare the effects of market volatilities on Zhihu and Asset Entities 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 Asset Entities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Asset Entities.
Diversification Opportunities for Zhihu and Asset Entities
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhihu and Asset is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Asset Entities Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Entities Class 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 Asset Entities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Entities Class has no effect on the direction of Zhihu i.e., Zhihu and Asset Entities go up and down completely randomly.
Pair Corralation between Zhihu and Asset Entities
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Asset Entities. But the stock apears to be less risky and, when comparing its historical volatility, Zhihu Inc ADR is 13.4 times less risky than Asset Entities. The stock trades about -0.01 of its potential returns per unit of risk. The Asset Entities Class is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Asset Entities Class on November 1, 2024 and sell it today you would earn a total of 9.41 from holding Asset Entities Class or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Asset Entities Class
Performance |
| Timeline |
| Zhihu Inc ADR |
| Asset Entities Class |
Zhihu and Asset Entities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Asset Entities
The main advantage of trading using opposite Zhihu and Asset Entities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Asset Entities 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 Asset Entities will offset losses from the drop in Asset Entities' long position.The idea behind Zhihu Inc ADR and Asset Entities Class 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.| Asset Entities vs. MediaAlpha | Asset Entities vs. Yelp Inc | Asset Entities vs. BuzzFeed | Asset Entities vs. Onfolio 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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