Correlation Between Zhihu and PVH Corp
Can any of the company-specific risk be diversified away by investing in both Zhihu and PVH Corp 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 PVH Corp 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 PVH Corp, you can compare the effects of market volatilities on Zhihu and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and PVH Corp.
Diversification Opportunities for Zhihu and PVH Corp
Significant diversification
The 3 months correlation between Zhihu and PVH is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Zhihu i.e., Zhihu and PVH Corp go up and down completely randomly.
Pair Corralation between Zhihu and PVH Corp
Allowing for the 90-day total investment horizon Zhihu is expected to generate 3.73 times less return on investment than PVH Corp. In addition to that, Zhihu is 2.21 times more volatile than PVH Corp. It trades about 0.03 of its total potential returns per unit of risk. PVH Corp is currently generating about 0.24 per unit of volatility. If you would invest 9,843 in PVH Corp on September 2, 2024 and sell it today you would earn a total of 994.00 from holding PVH Corp or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. PVH Corp
Performance |
| Timeline |
| Zhihu Inc ADR |
| PVH Corp |
Zhihu and PVH Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and PVH Corp
The main advantage of trading using opposite Zhihu and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.The idea behind Zhihu Inc ADR and PVH Corp 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.| PVH Corp vs. VF Corporation | PVH Corp vs. Levi Strauss Co | PVH Corp vs. Columbia Sportswear | PVH Corp vs. Oxford Industries |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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