Correlation Between IPower and ZKH Group

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

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

Diversification Opportunities for IPower and ZKH Group

-0.11

Correlation Coefficient

IPower  ZKH Group

Good diversification

The 3 months correlation between IPower and ZKH is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding iPower Inc 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 IPower 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 iPower Inc 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 IPower i.e., IPower and ZKH Group go up and down completely randomly.

Pair Corralation between IPower and ZKH Group

Considering the 90-day investment horizon iPower Inc is expected to generate 1.93 times more return on investment than ZKH Group. However, IPower is 1.93 times more volatile than ZKH Group Limited. It trades about 0.04 of its potential returns per unit of risk. ZKH Group Limited is currently generating about -0.08 per unit of risk. If you would invest  70.00  in iPower Inc on December 2, 2024 and sell it today you would lose (10.00) from holding iPower Inc or give up 14.29% of portfolio value over 90 days.

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

iPower Inc  vs.  ZKH Group Limited

iPower Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days iPower Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

ZKH Group Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZKH Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, ZKH Group is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IPower and ZKH Group

The main advantage of trading using opposite IPower and ZKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPower 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 iPower Inc 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.