Correlation Between Zhihu and Element Global
Can any of the company-specific risk be diversified away by investing in both Zhihu and Element Global 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 Element Global 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 Element Global, you can compare the effects of market volatilities on Zhihu and Element Global 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 Element Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Element Global.
Diversification Opportunities for Zhihu and Element Global
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Zhihu and Element is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Element Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Global 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 Element Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Global has no effect on the direction of Zhihu i.e., Zhihu and Element Global go up and down completely randomly.
Pair Corralation between Zhihu and Element Global
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.59 times more return on investment than Element Global. However, Zhihu Inc ADR is 1.71 times less risky than Element Global. It trades about -0.03 of its potential returns per unit of risk. Element Global is currently generating about -0.02 per unit of risk. If you would invest 593.00 in Zhihu Inc ADR on October 16, 2024 and sell it today you would lose (270.00) from holding Zhihu Inc ADR or give up 45.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.43% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Element Global
Performance |
| Timeline |
| Zhihu Inc ADR |
| Element Global |
Zhihu and Element Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Element Global
The main advantage of trading using opposite Zhihu and Element Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Element Global 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 Element Global will offset losses from the drop in Element Global's long position.The idea behind Zhihu Inc ADR and Element Global 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.| Element Global vs. LuxUrban Hotels 1300 | Element Global vs. Zhihu Inc ADR | Element Global vs. KVH Industries | Element Global vs. Gentex |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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