Correlation Between Kanzhun and Meta Platforms

Can any of the company-specific risk be diversified away by investing in both Kanzhun and Meta Platforms 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 Meta Platforms 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 Meta Platforms, you can compare the effects of market volatilities on Kanzhun and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kanzhun and Meta Platforms.

Diversification Opportunities for Kanzhun and Meta Platforms

-0.27

Correlation Coefficient

Kanzhun  Meta Platforms

Very good diversification

The 3 months correlation between Kanzhun and Meta is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kanzhun Ltd ADR and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Kanzhun i.e., Kanzhun and Meta Platforms go up and down completely randomly.

Pair Corralation between Kanzhun and Meta Platforms

Allowing for the 90-day total investment horizon Kanzhun Ltd ADR is expected to under-perform the Meta Platforms. In addition to that, Kanzhun is 1.07 times more volatile than Meta Platforms. It trades about -0.21 of its total potential returns per unit of risk. Meta Platforms is currently generating about -0.06 per unit of volatility. If you would invest  59,012  in Meta Platforms on January 12, 2025 and sell it today you would lose (4,655) from holding Meta Platforms or give up 7.89% of portfolio value over 90 days.

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

Kanzhun Ltd ADR  vs.  Meta Platforms

Kanzhun Ltd ADR

Risk-Adjusted Performance

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.

Meta Platforms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kanzhun and Meta Platforms

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

The idea behind Kanzhun Ltd ADR and Meta Platforms 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.