Correlation Between Zhihu and Cardlytics
Can any of the company-specific risk be diversified away by investing in both Zhihu and Cardlytics 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 Cardlytics 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 Cardlytics, you can compare the effects of market volatilities on Zhihu and Cardlytics 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 Cardlytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Cardlytics.
Diversification Opportunities for Zhihu and Cardlytics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhihu and Cardlytics is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Cardlytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardlytics 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 Cardlytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardlytics has no effect on the direction of Zhihu i.e., Zhihu and Cardlytics go up and down completely randomly.
Pair Corralation between Zhihu and Cardlytics
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Cardlytics. But the stock apears to be less risky and, when comparing its historical volatility, Zhihu Inc ADR is 1.95 times less risky than Cardlytics. The stock trades about -0.01 of its potential returns per unit of risk. The Cardlytics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 404.00 in Cardlytics on August 27, 2024 and sell it today you would lose (11.00) from holding Cardlytics or give up 2.72% 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. Cardlytics
Performance |
| Timeline |
| Zhihu Inc ADR |
| Cardlytics |
Zhihu and Cardlytics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Cardlytics
The main advantage of trading using opposite Zhihu and Cardlytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Cardlytics 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 Cardlytics will offset losses from the drop in Cardlytics' long position.The idea behind Zhihu Inc ADR and Cardlytics 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.| Cardlytics vs. Criteo Sa | Cardlytics vs. Deluxe | Cardlytics vs. Emerald Expositions Events | Cardlytics vs. Marchex |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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