Correlation Between 51Talk Online and ZKH Group

Can any of the company-specific risk be diversified away by investing in both 51Talk Online and ZKH Group 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 51Talk Online and ZKH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 51Talk Online Education and ZKH Group Limited, you can compare the effects of market volatilities on 51Talk Online and ZKH Group 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 51Talk Online with a short position of ZKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of 51Talk Online and ZKH Group.

Diversification Opportunities for 51Talk Online and ZKH Group

-0.33

Correlation Coefficient

51Talk Online  ZKH Group

Very good diversification

The 3 months correlation between 51Talk and ZKH is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding 51Talk Online Education and ZKH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKH Group Limited and 51Talk Online 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 51Talk Online Education are associated (or correlated) with ZKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKH Group Limited has no effect on the direction of 51Talk Online i.e., 51Talk Online and ZKH Group go up and down completely randomly.

Pair Corralation between 51Talk Online and ZKH Group

Considering the 90-day investment horizon 51Talk Online Education is expected to generate 1.82 times more return on investment than ZKH Group. However, 51Talk Online is 1.82 times more volatile than ZKH Group Limited. It trades about -0.07 of its potential returns per unit of risk. ZKH Group Limited is currently generating about -0.19 per unit of risk. If you would invest  1,468  in 51Talk Online Education on September 13, 2024 and sell it today you would lose (89.00) from holding 51Talk Online Education or give up 6.06% of portfolio value over 90 days.

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

51Talk Online Education  vs.  ZKH Group Limited

51Talk Online Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 51Talk Online Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ZKH Group Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZKH Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward-looking signals, ZKH Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 51Talk Online and ZKH Group

The main advantage of trading using opposite 51Talk Online and ZKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 51Talk Online position performs unexpectedly, ZKH Group 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 ZKH Group will offset losses from the drop in ZKH Group's long position.

The idea behind 51Talk Online Education and ZKH Group Limited 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.