Correlation Between NexGel Warrant and Zepp Health

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

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

Diversification Opportunities for NexGel Warrant and Zepp Health

-0.05

Correlation Coefficient

NexGel Warrant  Zepp Health

Good diversification

The 3 months correlation between NexGel and Zepp is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding NexGel Warrant 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 NexGel Warrant 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 NexGel Warrant 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 NexGel Warrant i.e., NexGel Warrant and Zepp Health go up and down completely randomly.

Pair Corralation between NexGel Warrant and Zepp Health

Assuming the 90 days horizon NexGel Warrant is expected to generate 2.5 times more return on investment than Zepp Health. However, NexGel Warrant is 2.5 times more volatile than Zepp Health Corp. It trades about 0.24 of its potential returns per unit of risk. Zepp Health Corp is currently generating about 0.08 per unit of risk. If you would invest  47.00  in NexGel Warrant on October 6, 2024 and sell it today you would earn a total of  28.00  from holding NexGel Warrant or generate 59.57% return on investment over 90 days.

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

NexGel Warrant  vs.  Zepp Health Corp

NexGel Warrant

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NexGel Warrant are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NexGel Warrant showed 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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with NexGel Warrant and Zepp Health

The main advantage of trading using opposite NexGel Warrant and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGel Warrant 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 NexGel Warrant 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.