Correlation Between Zhihu and WELLS
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By analyzing existing cross correlation between Zhihu Inc ADR and WELLS FARGO NEW, you can compare the effects of market volatilities on Zhihu and WELLS 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 WELLS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and WELLS.
Diversification Opportunities for Zhihu and WELLS
Significant diversification
The 3 months correlation between Zhihu and WELLS is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and WELLS FARGO NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLS FARGO NEW 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 WELLS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELLS FARGO NEW has no effect on the direction of Zhihu i.e., Zhihu and WELLS go up and down completely randomly.
Pair Corralation between Zhihu and WELLS
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the WELLS. In addition to that, Zhihu is 12.19 times more volatile than WELLS FARGO NEW. It trades about -0.02 of its total potential returns per unit of risk. WELLS FARGO NEW is currently generating about 0.01 per unit of volatility. If you would invest 9,635 in WELLS FARGO NEW on August 25, 2024 and sell it today you would earn a total of 213.00 from holding WELLS FARGO NEW or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Zhihu Inc ADR vs. WELLS FARGO NEW
Performance |
| Timeline |
| Zhihu Inc ADR |
| WELLS FARGO NEW |
Zhihu and WELLS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and WELLS
The main advantage of trading using opposite Zhihu and WELLS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, WELLS 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 WELLS will offset losses from the drop in WELLS's long position.The idea behind Zhihu Inc ADR and WELLS FARGO NEW 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.| WELLS vs. Zhihu Inc ADR | WELLS vs. Alaska Air Group | WELLS vs. WiMi Hologram Cloud | WELLS vs. Air Transport Services |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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