Correlation Between Zhihu and National Vision
Can any of the company-specific risk be diversified away by investing in both Zhihu and National Vision 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 National Vision 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 National Vision Holdings, you can compare the effects of market volatilities on Zhihu and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and National Vision.
Diversification Opportunities for Zhihu and National Vision
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zhihu and National is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Zhihu i.e., Zhihu and National Vision go up and down completely randomly.
Pair Corralation between Zhihu and National Vision
Allowing for the 90-day total investment horizon Zhihu is expected to generate 6.66 times less return on investment than National Vision. In addition to that, Zhihu is 1.47 times more volatile than National Vision Holdings. It trades about 0.03 of its total potential returns per unit of risk. National Vision Holdings is currently generating about 0.26 per unit of volatility. If you would invest 1,040 in National Vision Holdings on September 1, 2024 and sell it today you would earn a total of 170.00 from holding National Vision Holdings or generate 16.35% 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. National Vision Holdings
Performance |
| Timeline |
| Zhihu Inc ADR |
| National Vision Holdings |
Zhihu and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and National Vision
The main advantage of trading using opposite Zhihu and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.| Zhihu vs. Tencent Music Entertainment | Zhihu vs. Weibo Corp | Zhihu vs. DouYu International Holdings | Zhihu vs. Baidu Inc |
| National Vision vs. Alcon AG | National Vision vs. The Cooper Companies, | National Vision vs. AngioDynamics | National Vision vs. AptarGroup |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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