Correlation Between Zhihu and Snap
Can any of the company-specific risk be diversified away by investing in both Zhihu and Snap 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 Snap 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 Snap Inc, you can compare the effects of market volatilities on Zhihu and Snap 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 Snap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Snap.
Diversification Opportunities for Zhihu and Snap
Very poor diversification
The 3 months correlation between Zhihu and Snap is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap Inc 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 Snap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap Inc has no effect on the direction of Zhihu i.e., Zhihu and Snap go up and down completely randomly.
Pair Corralation between Zhihu and Snap
Allowing for the 90-day total investment horizon Zhihu is expected to generate 1.01 times less return on investment than Snap. But when comparing it to its historical volatility, Zhihu Inc ADR is 1.04 times less risky than Snap. It trades about 0.12 of its potential returns per unit of risk. Snap Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 825.00 in Snap Inc on April 30, 2025 and sell it today you would earn a total of 108.00 from holding Snap Inc or generate 13.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Snap Inc
Performance |
| Timeline |
| Zhihu Inc ADR |
| Snap Inc |
Zhihu and Snap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Snap
The main advantage of trading using opposite Zhihu and Snap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, Snap 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 Snap will offset losses from the drop in Snap's long position.| Zhihu vs. DouYu International Holdings | Zhihu vs. Tencent Music Entertainment | Zhihu vs. Weibo Corp | Zhihu vs. Tuya Inc ADR |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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