Correlation Between Zhihu and Live Ventures
Can any of the company-specific risk be diversified away by investing in both Zhihu and Live Ventures 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 Live Ventures 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 Live Ventures, you can compare the effects of market volatilities on Zhihu and Live Ventures 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 Live Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Live Ventures.
Diversification Opportunities for Zhihu and Live Ventures
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhihu and Live is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures 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 Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of Zhihu i.e., Zhihu and Live Ventures go up and down completely randomly.
Pair Corralation between Zhihu and Live Ventures
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 1.03 times more return on investment than Live Ventures. However, Zhihu is 1.03 times more volatile than Live Ventures. It trades about 0.07 of its potential returns per unit of risk. Live Ventures is currently generating about -0.05 per unit of risk. If you would invest 366.00 in Zhihu Inc ADR on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Zhihu Inc ADR or generate 4.92% 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. Live Ventures
Performance |
| Timeline |
| Zhihu Inc ADR |
| Live Ventures |
Zhihu and Live Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Live Ventures
The main advantage of trading using opposite Zhihu and Live Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Live Ventures 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 Live Ventures will offset losses from the drop in Live Ventures' long position.The idea behind Zhihu Inc ADR and Live Ventures 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.| Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Haverty Furniture Companies | Live Ventures vs. Kingfisher plc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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