Correlation Between Zhihu and Pinterest
Can any of the company-specific risk be diversified away by investing in both Zhihu and Pinterest 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 Pinterest 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 Pinterest, you can compare the effects of market volatilities on Zhihu and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Pinterest.
Diversification Opportunities for Zhihu and Pinterest
Very weak diversification
The 3 months correlation between Zhihu and Pinterest is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Zhihu i.e., Zhihu and Pinterest go up and down completely randomly.
Pair Corralation between Zhihu and Pinterest
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Pinterest. In addition to that, Zhihu is 1.46 times more volatile than Pinterest. It trades about -0.02 of its total potential returns per unit of risk. Pinterest is currently generating about 0.05 per unit of volatility. If you would invest 2,101 in Pinterest on August 27, 2024 and sell it today you would earn a total of 901.00 from holding Pinterest or generate 42.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Pinterest
Performance |
| Timeline |
| Zhihu Inc ADR |
Zhihu and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Pinterest
The main advantage of trading using opposite Zhihu and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.The idea behind Zhihu Inc ADR and Pinterest 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.| Pinterest vs. Alphabet Inc Class C | Pinterest vs. Twilio Inc | Pinterest vs. Snap Inc | Pinterest vs. Baidu 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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