Correlation Between Outbrain and Kanzhun

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

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

Diversification Opportunities for Outbrain and Kanzhun

-0.34

Correlation Coefficient

Outbrain  Kanzhun

Very good diversification

The 3 months correlation between Outbrain and Kanzhun is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain 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 Outbrain 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 Outbrain 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 Outbrain i.e., Outbrain and Kanzhun go up and down completely randomly.

Pair Corralation between Outbrain and Kanzhun

Allowing for the 90-day total investment horizon Outbrain is expected to generate 1.24 times less return on investment than Kanzhun. But when comparing it to its historical volatility, Outbrain is 1.78 times less risky than Kanzhun. It trades about 0.08 of its potential returns per unit of risk. Kanzhun Ltd ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,224  in Kanzhun Ltd ADR on September 2, 2024 and sell it today you would earn a total of  126.00  from holding Kanzhun Ltd ADR or generate 10.29% return on investment over 90 days.

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

Outbrain  vs.  Kanzhun Ltd ADR

Outbrain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Outbrain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kanzhun Ltd ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kanzhun Ltd ADR are ranked lower than 4 (%) 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 Outbrain and Kanzhun

The main advantage of trading using opposite Outbrain and Kanzhun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outbrain 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 Outbrain 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.