Correlation Between Zhihu and World Houseware
Can any of the company-specific risk be diversified away by investing in both Zhihu and World Houseware 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 World Houseware 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 World Houseware Limited, you can compare the effects of market volatilities on Zhihu and World Houseware 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 World Houseware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and World Houseware.
Diversification Opportunities for Zhihu and World Houseware
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Zhihu and World is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and World Houseware Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Houseware 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 World Houseware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Houseware has no effect on the direction of Zhihu i.e., Zhihu and World Houseware go up and down completely randomly.
Pair Corralation between Zhihu and World Houseware
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the World Houseware. But the stock apears to be less risky and, when comparing its historical volatility, Zhihu Inc ADR is 1.01 times less risky than World Houseware. The stock trades about -0.04 of its potential returns per unit of risk. The World Houseware Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 9.00 in World Houseware Limited on October 13, 2024 and sell it today you would lose (4.00) from holding World Houseware Limited or give up 44.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Zhihu Inc ADR vs. World Houseware Limited
Performance |
| Timeline |
| Zhihu Inc ADR |
| World Houseware |
Zhihu and World Houseware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and World Houseware
The main advantage of trading using opposite Zhihu and World Houseware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, World Houseware 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 World Houseware will offset losses from the drop in World Houseware's long position.The idea behind Zhihu Inc ADR and World Houseware Limited 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.| World Houseware vs. Imax Corp | World Houseware vs. Zhihu Inc ADR | World Houseware vs. Ryanair Holdings PLC | World Houseware vs. Delta Air Lines |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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