Correlation Between VOXX International and Zepp Health

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

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

Diversification Opportunities for VOXX International and Zepp Health

0.33

Correlation Coefficient

VOXX International  Zepp Health

Weak diversification

The 3 months correlation between VOXX and Zepp is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding VOXX International 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 VOXX International 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 VOXX International 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 VOXX International i.e., VOXX International and Zepp Health go up and down completely randomly.

Pair Corralation between VOXX International and Zepp Health

Given the investment horizon of 90 days VOXX International is expected to generate 4.52 times less return on investment than Zepp Health. But when comparing it to its historical volatility, VOXX International is 12.84 times less risky than Zepp Health. It trades about 0.15 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

VOXX International  vs.  Zepp Health Corp

VOXX International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, VOXX International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 VOXX International and Zepp Health

The main advantage of trading using opposite VOXX International and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOXX International 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 VOXX International 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.