Correlation Between Sharp and Zepp Health

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

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

Diversification Opportunities for Sharp and Zepp Health

0.24

Correlation Coefficient

Sharp  Zepp Health

Modest diversification

The 3 months correlation between Sharp and Zepp is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sharp 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 Sharp 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 Sharp 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 Sharp i.e., Sharp and Zepp Health go up and down completely randomly.

Pair Corralation between Sharp and Zepp Health

Assuming the 90 days horizon Sharp is expected to generate 1.63 times less return on investment than Zepp Health. But when comparing it to its historical volatility, Sharp is 4.06 times less risky than Zepp Health. It trades about 0.13 of its potential returns per unit of risk. Zepp Health Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  278.00  in Zepp Health Corp on December 27, 2024 and sell it today you would earn a total of  22.00  from holding Zepp Health Corp or generate 7.91% return on investment over 90 days.

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

Sharp  vs.  Zepp Health Corp

Sharp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sharp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sharp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Zepp Health Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zepp Health Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Zepp Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sharp and Zepp Health

The main advantage of trading using opposite Sharp and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharp 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 Sharp 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 Stocks Directory module to find actively traded stocks across global markets.