Correlation Between Zhihu and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Zhihu and FTAI Aviation 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 FTAI Aviation 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 FTAI Aviation Ltd, you can compare the effects of market volatilities on Zhihu and FTAI Aviation 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 FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and FTAI Aviation.
Diversification Opportunities for Zhihu and FTAI Aviation
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zhihu and FTAI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation 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 FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Zhihu i.e., Zhihu and FTAI Aviation go up and down completely randomly.
Pair Corralation between Zhihu and FTAI Aviation
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the FTAI Aviation. In addition to that, Zhihu is 3.67 times more volatile than FTAI Aviation Ltd. It trades about 0.0 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.05 per unit of volatility. If you would invest 2,088 in FTAI Aviation Ltd on November 27, 2024 and sell it today you would earn a total of 552.00 from holding FTAI Aviation Ltd or generate 26.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Zhihu Inc ADR |
| FTAI Aviation |
Zhihu and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and FTAI Aviation
The main advantage of trading using opposite Zhihu and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, FTAI Aviation 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.The idea behind Zhihu Inc ADR and FTAI Aviation Ltd 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.| FTAI Aviation vs. Nyxoah | FTAI Aviation vs. Academy Sports Outdoors | FTAI Aviation vs. Mattel Inc | FTAI Aviation vs. Canlan Ice Sports |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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