Correlation Between Zhihu and Alliant Energy
Can any of the company-specific risk be diversified away by investing in both Zhihu and Alliant Energy 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 Alliant Energy 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 Alliant Energy Corp, you can compare the effects of market volatilities on Zhihu and Alliant Energy 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 Alliant Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Alliant Energy.
Diversification Opportunities for Zhihu and Alliant Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zhihu and Alliant is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp 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 Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of Zhihu i.e., Zhihu and Alliant Energy go up and down completely randomly.
Pair Corralation between Zhihu and Alliant Energy
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 3.46 times more return on investment than Alliant Energy. However, Zhihu is 3.46 times more volatile than Alliant Energy Corp. It trades about 0.07 of its potential returns per unit of risk. Alliant Energy Corp is currently generating about 0.13 per unit of risk. If you would invest 331.00 in Zhihu Inc ADR on August 30, 2024 and sell it today you would earn a total of 53.00 from holding Zhihu Inc ADR or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Alliant Energy Corp
Performance |
| Timeline |
| Zhihu Inc ADR |
| Alliant Energy Corp |
Zhihu and Alliant Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Alliant Energy
The main advantage of trading using opposite Zhihu and Alliant Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Alliant Energy 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 Alliant Energy will offset losses from the drop in Alliant Energy's long position.The idea behind Zhihu Inc ADR and Alliant Energy Corp 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.| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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