Correlation Between Zhihu and Outokumpu Oyj
Can any of the company-specific risk be diversified away by investing in both Zhihu and Outokumpu Oyj 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 Outokumpu Oyj 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 Outokumpu Oyj, you can compare the effects of market volatilities on Zhihu and Outokumpu Oyj 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 Outokumpu Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Outokumpu Oyj.
Diversification Opportunities for Zhihu and Outokumpu Oyj
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zhihu and Outokumpu is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Outokumpu Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu Oyj 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 Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj has no effect on the direction of Zhihu i.e., Zhihu and Outokumpu Oyj go up and down completely randomly.
Pair Corralation between Zhihu and Outokumpu Oyj
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Outokumpu Oyj. In addition to that, Zhihu is 1.34 times more volatile than Outokumpu Oyj. It trades about -0.01 of its total potential returns per unit of risk. Outokumpu Oyj is currently generating about 0.02 per unit of volatility. If you would invest 348.00 in Outokumpu Oyj on September 2, 2024 and sell it today you would earn a total of 17.00 from holding Outokumpu Oyj or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.35% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Outokumpu Oyj
Performance |
| Timeline |
| Zhihu Inc ADR |
| Outokumpu Oyj |
Zhihu and Outokumpu Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Outokumpu Oyj
The main advantage of trading using opposite Zhihu and Outokumpu Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Outokumpu Oyj 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 Outokumpu Oyj will offset losses from the drop in Outokumpu Oyj's long position.The idea behind Zhihu Inc ADR and Outokumpu Oyj 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.| Outokumpu Oyj vs. Western Sierra Mining | Outokumpu Oyj vs. Universal Display | Outokumpu Oyj vs. Paiute Oil Mining | Outokumpu Oyj vs. Mattel Inc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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