Correlation Between Zhihu and Nexstar Broadcasting
Can any of the company-specific risk be diversified away by investing in both Zhihu and Nexstar Broadcasting 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 Nexstar Broadcasting 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 Nexstar Broadcasting Group, you can compare the effects of market volatilities on Zhihu and Nexstar Broadcasting 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 Nexstar Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Nexstar Broadcasting.
Diversification Opportunities for Zhihu and Nexstar Broadcasting
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zhihu and Nexstar is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting 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 Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Zhihu i.e., Zhihu and Nexstar Broadcasting go up and down completely randomly.
Pair Corralation between Zhihu and Nexstar Broadcasting
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 1.17 times more return on investment than Nexstar Broadcasting. However, Zhihu is 1.17 times more volatile than Nexstar Broadcasting Group. It trades about 0.01 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.0 per unit of risk. If you would invest 369.00 in Zhihu Inc ADR on August 28, 2024 and sell it today you would lose (1.00) from holding Zhihu Inc ADR or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Nexstar Broadcasting Group
Performance |
| Timeline |
| Zhihu Inc ADR |
| Nexstar Broadcasting |
Zhihu and Nexstar Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Nexstar Broadcasting
The main advantage of trading using opposite Zhihu and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Nexstar Broadcasting 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 Nexstar Broadcasting will offset losses from the drop in Nexstar Broadcasting's long position.The idea behind Zhihu Inc ADR and Nexstar Broadcasting Group 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.| Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Fox Corp Class | Nexstar Broadcasting vs. Liberty Media | Nexstar Broadcasting vs. AMC Networks |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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