Correlation Between Zhihu and Cheche Group
Can any of the company-specific risk be diversified away by investing in both Zhihu and Cheche Group 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 Cheche Group 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 Cheche Group Class, you can compare the effects of market volatilities on Zhihu and Cheche Group 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 Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Cheche Group.
Diversification Opportunities for Zhihu and Cheche Group
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zhihu and Cheche is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Cheche Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheche Group 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 Cheche Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheche Group Class has no effect on the direction of Zhihu i.e., Zhihu and Cheche Group go up and down completely randomly.
Pair Corralation between Zhihu and Cheche Group
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Cheche Group. But the stock apears to be less risky and, when comparing its historical volatility, Zhihu Inc ADR is 1.23 times less risky than Cheche Group. The stock trades about -0.03 of its potential returns per unit of risk. The Cheche Group Class is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Cheche Group Class on November 3, 2024 and sell it today you would lose (0.10) from holding Cheche Group Class or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Cheche Group Class
Performance |
| Timeline |
| Zhihu Inc ADR |
| Cheche Group Class |
Zhihu and Cheche Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Cheche Group
The main advantage of trading using opposite Zhihu and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Cheche Group 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 Cheche Group will offset losses from the drop in Cheche Group's long position.The idea behind Zhihu Inc ADR and Cheche Group 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.| Cheche Group vs. Zhihu Inc ADR | Cheche Group vs. Edgewell Personal Care | Cheche Group vs. National CineMedia | Cheche Group vs. RBC Bearings Incorporated |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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