Correlation Between Grocery Outlet and Zhihu

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

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

Diversification Opportunities for Grocery Outlet and Zhihu

-0.11

Correlation Coefficient

Grocery Outlet  Zhihu

Good diversification

The 3 months correlation between Grocery and Zhihu is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Zhihu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhihu Inc ADR and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Zhihu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhihu Inc ADR has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Zhihu go up and down completely randomly.

Pair Corralation between Grocery Outlet and Zhihu

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Zhihu. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.08 times less risky than Zhihu. The stock trades about -0.12 of its potential returns per unit of risk. The Zhihu Inc ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Zhihu Inc ADR on May 6, 2025 and sell it today you would earn a total of  6.00  from holding Zhihu Inc ADR or generate 1.46% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  Zhihu Inc ADR

Grocery Outlet Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Zhihu Inc ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Zhihu is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Grocery Outlet and Zhihu

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

The idea behind Grocery Outlet Holding and Zhihu Inc 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.