Correlation Between EverQuote and Kanzhun

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

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

Diversification Opportunities for EverQuote and Kanzhun

-0.33

Correlation Coefficient

EverQuote  Kanzhun

Very good diversification

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

Pair Corralation between EverQuote and Kanzhun

Given the investment horizon of 90 days EverQuote Class A is expected to under-perform the Kanzhun. But the stock apears to be less risky and, when comparing its historical volatility, EverQuote Class A is 1.14 times less risky than Kanzhun. The stock trades about -0.04 of its potential returns per unit of risk. The Kanzhun Ltd ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,224  in Kanzhun Ltd ADR on September 3, 2024 and sell it today you would earn a total of  176.00  from holding Kanzhun Ltd ADR or generate 14.38% return on investment over 90 days.

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

EverQuote Class A  vs.  Kanzhun Ltd ADR

EverQuote Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EverQuote Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Kanzhun Ltd ADR

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kanzhun Ltd ADR are ranked lower than 5 (%) 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.

Pair Trading with EverQuote and Kanzhun

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

The idea behind EverQuote Class A and Kanzhun Ltd ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.