Correlation Between Zhihu and Millicom International
Can any of the company-specific risk be diversified away by investing in both Zhihu and Millicom International 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 Millicom International 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 Millicom International Cellular, you can compare the effects of market volatilities on Zhihu and Millicom International 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 Millicom International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Millicom International.
Diversification Opportunities for Zhihu and Millicom International
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zhihu and Millicom is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International 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 Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of Zhihu i.e., Zhihu and Millicom International go up and down completely randomly.
Pair Corralation between Zhihu and Millicom International
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Millicom International. In addition to that, Zhihu is 1.9 times more volatile than Millicom International Cellular. It trades about -0.04 of its total potential returns per unit of risk. Millicom International Cellular is currently generating about 0.05 per unit of volatility. If you would invest 1,866 in Millicom International Cellular on November 9, 2024 and sell it today you would earn a total of 807.00 from holding Millicom International Cellular or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Millicom International Cellula
Performance |
| Timeline |
| Zhihu Inc ADR |
| Millicom International |
Zhihu and Millicom International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Millicom International
The main advantage of trading using opposite Zhihu and Millicom International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Millicom International 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 Millicom International will offset losses from the drop in Millicom International's long position.The idea behind Zhihu Inc ADR and Millicom International Cellular 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.| Millicom International vs. KT Corporation | Millicom International vs. Telkom Indonesia Tbk | Millicom International vs. SK Telecom Co | Millicom International vs. PLDT Inc ADR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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