Correlation Between Zhihu and Peoples Educational
Can any of the company-specific risk be diversified away by investing in both Zhihu and Peoples Educational 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 Peoples Educational 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 Peoples Educational Holdings, you can compare the effects of market volatilities on Zhihu and Peoples Educational 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 Peoples Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Peoples Educational.
Diversification Opportunities for Zhihu and Peoples Educational
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zhihu and Peoples is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Peoples Educational Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Educational 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 Peoples Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Educational has no effect on the direction of Zhihu i.e., Zhihu and Peoples Educational go up and down completely randomly.
Pair Corralation between Zhihu and Peoples Educational
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 0.39 times more return on investment than Peoples Educational. However, Zhihu Inc ADR is 2.58 times less risky than Peoples Educational. It trades about 0.16 of its potential returns per unit of risk. Peoples Educational Holdings is currently generating about -0.21 per unit of risk. If you would invest 334.00 in Zhihu Inc ADR on September 12, 2024 and sell it today you would earn a total of 46.00 from holding Zhihu Inc ADR or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Peoples Educational Holdings
Performance |
| Timeline |
| Zhihu Inc ADR |
| Peoples Educational |
Zhihu and Peoples Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Peoples Educational
The main advantage of trading using opposite Zhihu and Peoples Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Peoples Educational 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 Peoples Educational will offset losses from the drop in Peoples Educational's long position.| Zhihu vs. Twilio Inc | Zhihu vs. Meta Platforms | Zhihu vs. Alphabet Inc Class C | Zhihu vs. Alphabet Inc Class A |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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