Correlation Between Zhihu and United Parks
Can any of the company-specific risk be diversified away by investing in both Zhihu and United Parks 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 United Parks 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 United Parks Resorts, you can compare the effects of market volatilities on Zhihu and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and United Parks.
Diversification Opportunities for Zhihu and United Parks
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zhihu and United is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Zhihu i.e., Zhihu and United Parks go up and down completely randomly.
Pair Corralation between Zhihu and United Parks
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the United Parks. In addition to that, Zhihu is 1.14 times more volatile than United Parks Resorts. It trades about -0.22 of its total potential returns per unit of risk. United Parks Resorts is currently generating about -0.08 per unit of volatility. If you would invest 5,362 in United Parks Resorts on October 20, 2024 and sell it today you would lose (139.00) from holding United Parks Resorts or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. United Parks Resorts
Performance |
| Timeline |
| Zhihu Inc ADR |
| United Parks Resorts |
Zhihu and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and United Parks
The main advantage of trading using opposite Zhihu and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.The idea behind Zhihu Inc ADR and United Parks Resorts 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.| United Parks vs. US Global Investors | United Parks vs. RadNet Inc | United Parks vs. Logan Ridge Finance | United Parks vs. BRC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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