Correlation Between Zhihu and MORGAN

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Can any of the company-specific risk be diversified away by investing in both Zhihu and MORGAN 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 MORGAN 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 MORGAN STANLEY MTN, you can compare the effects of market volatilities on Zhihu and MORGAN 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 MORGAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and MORGAN.

Diversification Opportunities for Zhihu and MORGAN

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Zhihu and MORGAN is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and MORGAN STANLEY MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MORGAN STANLEY MTN 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 MORGAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MORGAN STANLEY MTN has no effect on the direction of Zhihu i.e., Zhihu and MORGAN go up and down completely randomly.

Pair Corralation between Zhihu and MORGAN

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 2.98 times more return on investment than MORGAN. However, Zhihu is 2.98 times more volatile than MORGAN STANLEY MTN. It trades about -0.01 of its potential returns per unit of risk. MORGAN STANLEY MTN is currently generating about -0.05 per unit of risk. If you would invest  433.00  in Zhihu Inc ADR on November 4, 2024 and sell it today you would lose (82.00) from holding Zhihu Inc ADR or give up 18.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.17%
ValuesDaily Returns

Zhihu Inc ADR  vs.  MORGAN STANLEY MTN

 Performance 
       Timeline  
Zhihu Inc ADR 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Zhihu is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
MORGAN STANLEY MTN 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MORGAN STANLEY MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for MORGAN STANLEY MTN investors.

Zhihu and MORGAN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhihu and MORGAN

The main advantage of trading using opposite Zhihu and MORGAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, MORGAN 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 MORGAN will offset losses from the drop in MORGAN's long position.
The idea behind Zhihu Inc ADR and MORGAN STANLEY MTN 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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