Correlation Between Zhihu and Phoenix New
Can any of the company-specific risk be diversified away by investing in both Zhihu and Phoenix New 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 Phoenix New 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 Phoenix New Media, you can compare the effects of market volatilities on Zhihu and Phoenix New 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 Phoenix New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Phoenix New.
Diversification Opportunities for Zhihu and Phoenix New
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zhihu and Phoenix is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Phoenix New Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix New Media 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 Phoenix New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix New Media has no effect on the direction of Zhihu i.e., Zhihu and Phoenix New go up and down completely randomly.
Pair Corralation between Zhihu and Phoenix New
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.84 times more return on investment than Phoenix New. However, Zhihu Inc ADR is 1.19 times less risky than Phoenix New. It trades about 0.02 of its potential returns per unit of risk. Phoenix New Media is currently generating about -0.1 per unit of risk. If you would invest 358.00 in Zhihu Inc ADR on August 26, 2024 and sell it today you would earn a total of 2.00 from holding Zhihu Inc ADR or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Phoenix New Media
Performance |
| Timeline |
| Zhihu Inc ADR |
| Phoenix New Media |
Zhihu and Phoenix New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Phoenix New
The main advantage of trading using opposite Zhihu and Phoenix New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Phoenix New 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 Phoenix New will offset losses from the drop in Phoenix New's long position.The idea behind Zhihu Inc ADR and Phoenix New Media 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.| Phoenix New vs. Alphabet Inc Class C | Phoenix New vs. Twilio Inc | Phoenix New vs. Snap Inc | Phoenix New vs. Baidu Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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