Correlation Between Zhihu and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both Zhihu and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness, you can compare the effects of market volatilities on Zhihu and Xponential Fitness 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 Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Xponential Fitness.
Diversification Opportunities for Zhihu and Xponential Fitness
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhihu and Xponential is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Zhihu i.e., Zhihu and Xponential Fitness go up and down completely randomly.
Pair Corralation between Zhihu and Xponential Fitness
Allowing for the 90-day total investment horizon Zhihu is expected to generate 9.29 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, Zhihu Inc ADR is 1.61 times less risky than Xponential Fitness. It trades about 0.03 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,241 in Xponential Fitness on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Xponential Fitness or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Xponential Fitness
Performance |
| Timeline |
| Zhihu Inc ADR |
| Xponential Fitness |
Zhihu and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Xponential Fitness
The main advantage of trading using opposite Zhihu and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.The idea behind Zhihu Inc ADR and Xponential Fitness 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.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |