Correlation Between Zhihu and BAIYU Holdings
Can any of the company-specific risk be diversified away by investing in both Zhihu and BAIYU Holdings 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 BAIYU Holdings 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 BAIYU Holdings, you can compare the effects of market volatilities on Zhihu and BAIYU Holdings 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 BAIYU Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and BAIYU Holdings.
Diversification Opportunities for Zhihu and BAIYU Holdings
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhihu and BAIYU is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings 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 BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of Zhihu i.e., Zhihu and BAIYU Holdings go up and down completely randomly.
Pair Corralation between Zhihu and BAIYU Holdings
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.38 times more return on investment than BAIYU Holdings. However, Zhihu Inc ADR is 2.65 times less risky than BAIYU Holdings. It trades about -0.01 of its potential returns per unit of risk. BAIYU Holdings is currently generating about -0.04 per unit of risk. If you would invest 428.00 in Zhihu Inc ADR on September 3, 2024 and sell it today you would lose (69.00) from holding Zhihu Inc ADR or give up 16.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.39% |
| Values | Daily Returns |
Zhihu Inc ADR vs. BAIYU Holdings
Performance |
| Timeline |
| Zhihu Inc ADR |
| BAIYU Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Zhihu and BAIYU Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and BAIYU Holdings
The main advantage of trading using opposite Zhihu and BAIYU Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, BAIYU Holdings 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 BAIYU Holdings will offset losses from the drop in BAIYU Holdings' long position.The idea behind Zhihu Inc ADR and BAIYU Holdings 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.| BAIYU Holdings vs. Jeld Wen Holding | BAIYU Holdings vs. National Beverage Corp | BAIYU Holdings vs. Constellation Brands Class | BAIYU Holdings vs. Willamette Valley Vineyards |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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