Correlation Between Qurate Retail and ZKH Group

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

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

Diversification Opportunities for Qurate Retail and ZKH Group

0.17

Correlation Coefficient

Qurate Retail  ZKH Group

Average diversification

The 3 months correlation between Qurate and ZKH is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail 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 Qurate Retail 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 Qurate Retail 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 Qurate Retail i.e., Qurate Retail and ZKH Group go up and down completely randomly.

Pair Corralation between Qurate Retail and ZKH Group

Assuming the 90 days horizon Qurate Retail is expected to under-perform the ZKH Group. But the preferred stock apears to be less risky and, when comparing its historical volatility, Qurate Retail is 1.47 times less risky than ZKH Group. The preferred stock trades about -0.04 of its potential returns per unit of risk. The ZKH Group Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  297.00  in ZKH Group Limited on October 3, 2024 and sell it today you would earn a total of  54.00  from holding ZKH Group Limited or generate 18.18% return on investment over 90 days.

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

Qurate Retail  vs.  ZKH Group Limited

Qurate Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qurate Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's technical and fundamental 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.

ZKH Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKH Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, ZKH Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Qurate Retail and ZKH Group

The main advantage of trading using opposite Qurate Retail and ZKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qurate Retail 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 Qurate Retail 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.