Correlation Between Zhihu and Lendlease Global
Can any of the company-specific risk be diversified away by investing in both Zhihu and Lendlease Global 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 Lendlease Global 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 Lendlease Global Commercial, you can compare the effects of market volatilities on Zhihu and Lendlease Global 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 Lendlease Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Lendlease Global.
Diversification Opportunities for Zhihu and Lendlease Global
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zhihu and Lendlease is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Lendlease Global Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Global Com 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 Lendlease Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Global Com has no effect on the direction of Zhihu i.e., Zhihu and Lendlease Global go up and down completely randomly.
Pair Corralation between Zhihu and Lendlease Global
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 11.62 times more return on investment than Lendlease Global. However, Zhihu is 11.62 times more volatile than Lendlease Global Commercial. It trades about 0.4 of its potential returns per unit of risk. Lendlease Global Commercial is currently generating about 0.22 per unit of risk. If you would invest 346.00 in Zhihu Inc ADR on November 28, 2024 and sell it today you would earn a total of 194.00 from holding Zhihu Inc ADR or generate 56.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Lendlease Global Commercial
Performance |
| Timeline |
| Zhihu Inc ADR |
| Lendlease Global Com |
Zhihu and Lendlease Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Lendlease Global
The main advantage of trading using opposite Zhihu and Lendlease Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Lendlease Global 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 Lendlease Global will offset losses from the drop in Lendlease Global's long position.The idea behind Zhihu Inc ADR and Lendlease Global Commercial 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.| Lendlease Global vs. Magna International | Lendlease Global vs. PACCAR Inc | Lendlease Global vs. Mitsubishi UFJ Lease | Lendlease Global vs. FDG Electric Vehicles |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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