Correlation Between Vizio Holding and Zepp Health

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

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

Diversification Opportunities for Vizio Holding and Zepp Health

-0.2

Correlation Coefficient

Vizio Holding  Zepp Health

Good diversification

The 3 months correlation between Vizio and Zepp is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vizio Holding Corp 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 Vizio Holding 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 Vizio Holding Corp 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 Vizio Holding i.e., Vizio Holding and Zepp Health go up and down completely randomly.

Pair Corralation between Vizio Holding and Zepp Health

Given the investment horizon of 90 days Vizio Holding is expected to generate 3.74 times less return on investment than Zepp Health. But when comparing it to its historical volatility, Vizio Holding Corp is 11.24 times less risky than Zepp Health. It trades about 0.03 of its potential returns per unit of risk. Zepp Health Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Zepp Health Corp on September 3, 2024 and sell it today you would lose (18.00) from holding Zepp Health Corp or give up 5.73% of portfolio value over 90 days.

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

Vizio Holding Corp  vs.  Zepp Health Corp

Vizio Holding Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vizio Holding Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Vizio Holding is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Zepp Health Corp

Risk-Adjusted Performance

0 of 100

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 Vizio Holding and Zepp Health

The main advantage of trading using opposite Vizio Holding and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vizio Holding 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 Vizio Holding Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.