Correlation Between Drive Shack and ZKH Group

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

By analyzing existing cross correlation between Drive Shack and ZKH Group Limited, you can compare the effects of market volatilities on Drive Shack and ZKH Group 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 Drive Shack with a short position of ZKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Drive Shack and ZKH Group.

Diversification Opportunities for Drive Shack and ZKH Group

0.0

Correlation Coefficient

Drive Shack  ZKH Group

Pay attention - limited upside

The 3 months correlation between Drive and ZKH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Drive Shack and ZKH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKH Group Limited and Drive Shack 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 Drive Shack are associated (or correlated) with ZKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKH Group Limited has no effect on the direction of Drive Shack i.e., Drive Shack and ZKH Group go up and down completely randomly.

Pair Corralation between Drive Shack and ZKH Group

If you would invest  330.00  in ZKH Group Limited on December 26, 2024 and sell it today you would earn a total of  17.00  from holding ZKH Group Limited or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Drive Shack  vs.  ZKH Group Limited

Drive Shack

Risk-Adjusted Performance

Very Weak

Over the last 90 days Drive Shack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Drive Shack is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

ZKH Group Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZKH Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward-looking signals, ZKH Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Drive Shack and ZKH Group

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

The idea behind Drive Shack and ZKH Group Limited 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.