Correlation Between Emerson Radio and Zepp Health

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

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

Diversification Opportunities for Emerson Radio and Zepp Health

0.19

Correlation Coefficient

Emerson Radio  Zepp Health

Average diversification

The 3 months correlation between Emerson and Zepp is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio 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 Emerson Radio 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 Emerson Radio 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 Emerson Radio i.e., Emerson Radio and Zepp Health go up and down completely randomly.

Pair Corralation between Emerson Radio and Zepp Health

Considering the 90-day investment horizon Emerson Radio is expected to generate 1.96 times more return on investment than Zepp Health. However, Emerson Radio is 1.96 times more volatile than Zepp Health Corp. It trades about 0.07 of its potential returns per unit of risk. Zepp Health Corp is currently generating about -0.05 per unit of risk. If you would invest  42.00  in Emerson Radio on December 3, 2024 and sell it today you would earn a total of  4.00  from holding Emerson Radio or generate 9.52% return on investment over 90 days.

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

Emerson Radio  vs.  Zepp Health Corp

Emerson Radio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Radio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Emerson Radio displayed solid returns over the last few months and may actually be approaching a breakup point.

Zepp Health Corp

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Emerson Radio and Zepp Health

The main advantage of trading using opposite Emerson Radio and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio 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 Emerson Radio 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.