Correlation Between Zhihu and IZEA
Can any of the company-specific risk be diversified away by investing in both Zhihu and IZEA 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 IZEA 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 IZEA Inc, you can compare the effects of market volatilities on Zhihu and IZEA 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 IZEA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and IZEA.
Diversification Opportunities for Zhihu and IZEA
Average diversification
The 3 months correlation between Zhihu and IZEA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and IZEA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IZEA Inc 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 IZEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IZEA Inc has no effect on the direction of Zhihu i.e., Zhihu and IZEA go up and down completely randomly.
Pair Corralation between Zhihu and IZEA
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.57 times more return on investment than IZEA. However, Zhihu Inc ADR is 1.74 times less risky than IZEA. It trades about -0.01 of its potential returns per unit of risk. IZEA Inc is currently generating about -0.03 per unit of risk. If you would invest 354.00 in Zhihu Inc ADR on November 1, 2024 and sell it today you would lose (3.00) from holding Zhihu Inc ADR or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. IZEA Inc
Performance |
| Timeline |
| Zhihu Inc ADR |
| IZEA Inc |
Zhihu and IZEA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and IZEA
The main advantage of trading using opposite Zhihu and IZEA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, IZEA 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 IZEA will offset losses from the drop in IZEA's long position.The idea behind Zhihu Inc ADR and IZEA Inc 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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