Correlation Between Zhihu and RadNet
Can any of the company-specific risk be diversified away by investing in both Zhihu and RadNet 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 RadNet 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 RadNet Inc, you can compare the effects of market volatilities on Zhihu and RadNet 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 RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and RadNet.
Diversification Opportunities for Zhihu and RadNet
Significant diversification
The 3 months correlation between Zhihu and RadNet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Zhihu i.e., Zhihu and RadNet go up and down completely randomly.
Pair Corralation between Zhihu and RadNet
Allowing for the 90-day total investment horizon Zhihu is expected to generate 8.35 times less return on investment than RadNet. But when comparing it to its historical volatility, Zhihu Inc ADR is 1.01 times less risky than RadNet. It trades about 0.03 of its potential returns per unit of risk. RadNet Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,654 in RadNet Inc on September 2, 2024 and sell it today you would earn a total of 1,522 from holding RadNet Inc or generate 22.87% 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. RadNet Inc
Performance |
| Timeline |
| Zhihu Inc ADR |
| RadNet Inc |
Zhihu and RadNet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and RadNet
The main advantage of trading using opposite Zhihu and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, RadNet 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 RadNet will offset losses from the drop in RadNet's long position.The idea behind Zhihu Inc ADR and RadNet Inc 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.| RadNet vs. Sotera Health Co | RadNet vs. Neogen | RadNet vs. Myriad Genetics | RadNet vs. bioAffinity Technologies Warrant |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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