Correlation Between Zhihu and SALESFORCECOM

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

Diversification Opportunities for Zhihu and SALESFORCECOM

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Zhihu and SALESFORCECOM is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and SALESFORCECOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCECOM 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 SALESFORCECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCECOM INC has no effect on the direction of Zhihu i.e., Zhihu and SALESFORCECOM go up and down completely randomly.

Pair Corralation between Zhihu and SALESFORCECOM

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the SALESFORCECOM. In addition to that, Zhihu is 2.36 times more volatile than SALESFORCECOM INC. It trades about -0.03 of its total potential returns per unit of risk. SALESFORCECOM INC is currently generating about 0.05 per unit of volatility. If you would invest  5,566  in SALESFORCECOM INC on August 25, 2024 and sell it today you would earn a total of  1,198  from holding SALESFORCECOM INC or generate 21.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy92.25%
ValuesDaily Returns

Zhihu Inc ADR  vs.  SALESFORCECOM INC

 Performance 
       Timeline  
Zhihu Inc ADR 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Zhihu demonstrated solid returns over the last few months and may actually be approaching a breakup point.
SALESFORCECOM INC 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in SALESFORCECOM INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SALESFORCECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhihu and SALESFORCECOM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhihu and SALESFORCECOM

The main advantage of trading using opposite Zhihu and SALESFORCECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, SALESFORCECOM 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 SALESFORCECOM will offset losses from the drop in SALESFORCECOM's long position.
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The idea behind Zhihu Inc ADR and SALESFORCECOM 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.
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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