Correlation Between Zhihu and Mattel
Can any of the company-specific risk be diversified away by investing in both Zhihu and Mattel 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 Mattel 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 Mattel Inc, you can compare the effects of market volatilities on Zhihu and Mattel 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 Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Mattel.
Diversification Opportunities for Zhihu and Mattel
Average diversification
The 3 months correlation between Zhihu and Mattel is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel 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 Mattel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mattel Inc has no effect on the direction of Zhihu i.e., Zhihu and Mattel go up and down completely randomly.
Pair Corralation between Zhihu and Mattel
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 2.02 times more return on investment than Mattel. However, Zhihu is 2.02 times more volatile than Mattel Inc. It trades about 0.03 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.14 per unit of risk. If you would invest 357.00 in Zhihu Inc ADR on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Zhihu Inc ADR or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Mattel Inc
Performance |
| Timeline |
| Zhihu Inc ADR |
| Mattel Inc |
Zhihu and Mattel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Mattel
The main advantage of trading using opposite Zhihu and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Mattel 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 Mattel will offset losses from the drop in Mattel's long position.| Zhihu vs. Tencent Music Entertainment | Zhihu vs. Weibo Corp | Zhihu vs. DouYu International Holdings | Zhihu vs. Baidu Inc |
| Mattel vs. Funko Inc | Mattel vs. JAKKS Pacific | Mattel vs. Madison Square Garden | Mattel vs. Life Time Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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