Correlation Between Celestica and Zepp Health

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

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

Diversification Opportunities for Celestica and Zepp Health

-0.7

Correlation Coefficient

Celestica  Zepp Health

Excellent diversification

The 3 months correlation between Celestica and Zepp is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Zepp Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zepp Health Corp and Celestica 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 Celestica are associated (or correlated) with Zepp Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zepp Health Corp has no effect on the direction of Celestica i.e., Celestica and Zepp Health go up and down completely randomly.

Pair Corralation between Celestica and Zepp Health

Considering the 90-day investment horizon Celestica is expected to generate 0.39 times more return on investment than Zepp Health. However, Celestica is 2.56 times less risky than Zepp Health. It trades about 0.15 of its potential returns per unit of risk. Zepp Health Corp is currently generating about -0.02 per unit of risk. If you would invest  8,406  in Celestica on September 13, 2024 and sell it today you would earn a total of  771.50  from holding Celestica or generate 9.18% return on investment over 90 days.

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

Celestica  vs.  Zepp Health Corp

Celestica

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zepp Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zepp Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Zepp Health is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Celestica and Zepp Health

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

The idea behind Celestica and Zepp Health Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.