Correlation Between Zhihu and Torex Gold
Can any of the company-specific risk be diversified away by investing in both Zhihu and Torex Gold 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 Torex Gold 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 Torex Gold Resources, you can compare the effects of market volatilities on Zhihu and Torex Gold 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 Torex Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Torex Gold.
Diversification Opportunities for Zhihu and Torex Gold
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhihu and Torex is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources 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 Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Zhihu i.e., Zhihu and Torex Gold go up and down completely randomly.
Pair Corralation between Zhihu and Torex Gold
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 2.23 times more return on investment than Torex Gold. However, Zhihu is 2.23 times more volatile than Torex Gold Resources. It trades about 0.33 of its potential returns per unit of risk. Torex Gold Resources is currently generating about 0.07 per unit of risk. If you would invest 351.00 in Zhihu Inc ADR on December 1, 2024 and sell it today you would earn a total of 160.00 from holding Zhihu Inc ADR or generate 45.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Torex Gold Resources
Performance |
| Timeline |
| Zhihu Inc ADR |
| Torex Gold Resources |
Zhihu and Torex Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Torex Gold
The main advantage of trading using opposite Zhihu and Torex Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Torex Gold 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 Torex Gold will offset losses from the drop in Torex Gold's long position.The idea behind Zhihu Inc ADR and Torex Gold Resources 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.| Torex Gold vs. Cleantech Power Corp | Torex Gold vs. Griffon | Torex Gold vs. Orion Office Reit | Torex Gold vs. Douglas Emmett |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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