Correlation Between Zhihu and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Zhihu and Willamette Valley 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 Willamette Valley 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 Willamette Valley Vineyards, you can compare the effects of market volatilities on Zhihu and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Willamette Valley.
Diversification Opportunities for Zhihu and Willamette Valley
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhihu and Willamette is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Zhihu i.e., Zhihu and Willamette Valley go up and down completely randomly.
Pair Corralation between Zhihu and Willamette Valley
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 1.81 times more return on investment than Willamette Valley. However, Zhihu is 1.81 times more volatile than Willamette Valley Vineyards. It trades about 0.0 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.05 per unit of risk. If you would invest 397.00 in Zhihu Inc ADR on September 3, 2024 and sell it today you would lose (38.00) from holding Zhihu Inc ADR or give up 9.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Zhihu Inc ADR |
| Willamette Valley |
Zhihu and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Willamette Valley
The main advantage of trading using opposite Zhihu and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.The idea behind Zhihu Inc ADR and Willamette Valley Vineyards 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.| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Iconic Brands | Willamette Valley vs. Naked Wines plc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |