Correlation Between Zhihu and Primega Group
Can any of the company-specific risk be diversified away by investing in both Zhihu and Primega Group 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 Primega Group 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 Primega Group Holdings, you can compare the effects of market volatilities on Zhihu and Primega Group 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 Primega Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Primega Group.
Diversification Opportunities for Zhihu and Primega Group
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zhihu and Primega is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Primega Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primega Group Holdings 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 Primega Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primega Group Holdings has no effect on the direction of Zhihu i.e., Zhihu and Primega Group go up and down completely randomly.
Pair Corralation between Zhihu and Primega Group
Allowing for the 90-day total investment horizon Zhihu is expected to generate 75.87 times less return on investment than Primega Group. But when comparing it to its historical volatility, Zhihu Inc ADR is 24.54 times less risky than Primega Group. It trades about 0.04 of its potential returns per unit of risk. Primega Group Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 422.00 in Primega Group Holdings on September 3, 2024 and sell it today you would lose (184.00) from holding Primega Group Holdings or give up 43.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.4% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Primega Group Holdings
Performance |
| Timeline |
| Zhihu Inc ADR |
| Primega Group Holdings |
Zhihu and Primega Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Primega Group
The main advantage of trading using opposite Zhihu and Primega Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Primega Group 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 Primega Group will offset losses from the drop in Primega Group's long position.The idea behind Zhihu Inc ADR and Primega Group Holdings 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.| Primega Group vs. Tianjin Capital Environmental | Primega Group vs. United Parks Resorts | Primega Group vs. Funko Inc | Primega Group vs. Academy Sports Outdoors |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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