Correlation Between Zhihu and China Southern
Can any of the company-specific risk be diversified away by investing in both Zhihu and China Southern 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 China Southern 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 China Southern Airlines, you can compare the effects of market volatilities on Zhihu and China Southern 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 China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and China Southern.
Diversification Opportunities for Zhihu and China Southern
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Zhihu and China is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines 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 China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Zhihu i.e., Zhihu and China Southern go up and down completely randomly.
Pair Corralation between Zhihu and China Southern
If you would invest 3,697 in China Southern Airlines on September 12, 2024 and sell it today you would earn a total of 0.00 from holding China Southern Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Zhihu Inc ADR vs. China Southern Airlines
Performance |
| Timeline |
| Zhihu Inc ADR |
| China Southern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Zhihu and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and China Southern
The main advantage of trading using opposite Zhihu and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, China Southern 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 China Southern will offset losses from the drop in China Southern's long position.The idea behind Zhihu Inc ADR and China Southern Airlines 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.| China Southern vs. Zhihu Inc ADR | China Southern vs. Pinterest | China Southern vs. Analog Devices | China Southern vs. Amkor Technology |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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