Correlation Between Eastman Kodak and Zepp Health

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

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

Diversification Opportunities for Eastman Kodak and Zepp Health

-0.21

Correlation Coefficient

Eastman Kodak  Zepp Health

Very good diversification

The 3 months correlation between Eastman and Zepp is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co 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 Eastman Kodak 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 Eastman Kodak Co 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 Eastman Kodak i.e., Eastman Kodak and Zepp Health go up and down completely randomly.

Pair Corralation between Eastman Kodak and Zepp Health

Given the investment horizon of 90 days Eastman Kodak Co is expected to under-perform the Zepp Health. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Kodak Co is 1.25 times less risky than Zepp Health. The stock trades about -0.01 of its potential returns per unit of risk. The Zepp Health Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Zepp Health Corp on December 28, 2024 and sell it today you would earn a total of  76.00  from holding Zepp Health Corp or generate 28.15% return on investment over 90 days.

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

Eastman Kodak Co  vs.  Zepp Health Corp

Eastman Kodak

Risk-Adjusted Performance

Very Weak

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

Zepp Health Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zepp Health Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Zepp Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastman Kodak and Zepp Health

The main advantage of trading using opposite Eastman Kodak and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Kodak 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 Eastman Kodak Co 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.