Correlation Between Sharp Corp and Zepp Health

Can any of the company-specific risk be diversified away by investing in both Sharp Corp 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 Corp 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 Corp ADR and Zepp Health Corp, you can compare the effects of market volatilities on Sharp Corp 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 Corp with a short position of Zepp Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharp Corp and Zepp Health.

Diversification Opportunities for Sharp Corp and Zepp Health

0.22

Correlation Coefficient

Sharp Corp  Zepp Health

Modest diversification

The 3 months correlation between Sharp and Zepp is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sharp Corp ADR 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 Corp 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 Corp ADR 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 Corp i.e., Sharp Corp and Zepp Health go up and down completely randomly.

Pair Corralation between Sharp Corp and Zepp Health

Assuming the 90 days horizon Sharp Corp ADR is expected to generate 0.95 times more return on investment than Zepp Health. However, Sharp Corp ADR is 1.05 times less risky than Zepp Health. It trades about 0.02 of its potential returns per unit of risk. Zepp Health Corp is currently generating about 0.0 per unit of risk. If you would invest  152.00  in Sharp Corp ADR on September 12, 2024 and sell it today you would lose (1.00) from holding Sharp Corp ADR or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sharp Corp ADR  vs.  Zepp Health Corp

Sharp Corp ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sharp Corp ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sharp Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 relatively invariable basic indicators, Zepp Health is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sharp Corp and Zepp Health

The main advantage of trading using opposite Sharp Corp and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharp Corp 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 Corp ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.