Correlation Between Kanzhun and Beachbody

Can any of the company-specific risk be diversified away by investing in both Kanzhun and Beachbody 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 Kanzhun and Beachbody into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kanzhun Ltd ADR and Beachbody, you can compare the effects of market volatilities on Kanzhun and Beachbody 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 Kanzhun with a short position of Beachbody. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kanzhun and Beachbody.

Diversification Opportunities for Kanzhun and Beachbody

0.43

Correlation Coefficient

Kanzhun  Beachbody

Very weak diversification

The 3 months correlation between Kanzhun and Beachbody is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kanzhun Ltd ADR and Beachbody in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beachbody and Kanzhun 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 Kanzhun Ltd ADR are associated (or correlated) with Beachbody. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beachbody has no effect on the direction of Kanzhun i.e., Kanzhun and Beachbody go up and down completely randomly.

Pair Corralation between Kanzhun and Beachbody

Allowing for the 90-day total investment horizon Kanzhun Ltd ADR is expected to generate 1.65 times more return on investment than Beachbody. However, Kanzhun is 1.65 times more volatile than Beachbody. It trades about 0.02 of its potential returns per unit of risk. Beachbody is currently generating about -0.11 per unit of risk. If you would invest  1,452  in Kanzhun Ltd ADR on September 12, 2024 and sell it today you would lose (3.00) from holding Kanzhun Ltd ADR or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kanzhun Ltd ADR  vs.  Beachbody

Kanzhun Ltd ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kanzhun Ltd ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kanzhun showed solid returns over the last few months and may actually be approaching a breakup point.

Beachbody

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beachbody are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Beachbody may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kanzhun and Beachbody

The main advantage of trading using opposite Kanzhun and Beachbody positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kanzhun position performs unexpectedly, Beachbody 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 Beachbody will offset losses from the drop in Beachbody's long position.

The idea behind Kanzhun Ltd ADR and Beachbody 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.