Correlation Between Zhihu and Kenvue

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

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

Diversification Opportunities for Zhihu and Kenvue

-0.26

Correlation Coefficient

Zhihu  Kenvue

Very good diversification

The 3 months correlation between Zhihu and Kenvue is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc and Zhihu 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 Zhihu Inc ADR are associated (or correlated) with Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Zhihu i.e., Zhihu and Kenvue go up and down completely randomly.

Pair Corralation between Zhihu and Kenvue

Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to generate 1.65 times more return on investment than Kenvue. However, Zhihu is 1.65 times more volatile than Kenvue Inc. It trades about 0.02 of its potential returns per unit of risk. Kenvue Inc is currently generating about -0.07 per unit of risk. If you would invest  409.00  in Zhihu Inc ADR on May 5, 2025 and sell it today you would earn a total of  7.00  from holding Zhihu Inc ADR or generate 1.71% return on investment over 90 days.

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

Zhihu Inc ADR  vs.  Kenvue Inc

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Kenvue Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kenvue Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Zhihu and Kenvue

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

The idea behind Zhihu Inc ADR and Kenvue Inc 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.