Correlation Between Zhihu and Jeld Wen
Can any of the company-specific risk be diversified away by investing in both Zhihu and Jeld Wen 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 Jeld Wen 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 Jeld Wen Holding, you can compare the effects of market volatilities on Zhihu and Jeld Wen 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 Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Jeld Wen.
Diversification Opportunities for Zhihu and Jeld Wen
Modest diversification
The 3 months correlation between Zhihu and Jeld is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Zhihu i.e., Zhihu and Jeld Wen go up and down completely randomly.
Pair Corralation between Zhihu and Jeld Wen
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Jeld Wen. In addition to that, Zhihu is 1.11 times more volatile than Jeld Wen Holding. It trades about -0.02 of its total potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.01 per unit of volatility. If you would invest 1,494 in Jeld Wen Holding on September 1, 2024 and sell it today you would lose (405.00) from holding Jeld Wen Holding or give up 27.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Jeld Wen Holding
Performance |
| Timeline |
| Zhihu Inc ADR |
| Jeld Wen Holding |
Zhihu and Jeld Wen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Jeld Wen
The main advantage of trading using opposite Zhihu and Jeld Wen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Jeld Wen 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 Jeld Wen will offset losses from the drop in Jeld Wen's long position.| Zhihu vs. Tencent Music Entertainment | Zhihu vs. Weibo Corp | Zhihu vs. DouYu International Holdings | Zhihu vs. Baidu Inc |
| Jeld Wen vs. Trex Company | Jeld Wen vs. Armstrong World Industries | Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Apogee Enterprises |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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