Correlation Between Zepp Health and Sharp

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

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

Diversification Opportunities for Zepp Health and Sharp

0.24

Correlation Coefficient

Zepp Health  Sharp

Modest diversification

The 3 months correlation between Zepp and Sharp is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Zepp Health Corp and Sharp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp and Zepp Health 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 Zepp Health Corp are associated (or correlated) with Sharp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp has no effect on the direction of Zepp Health i.e., Zepp Health and Sharp go up and down completely randomly.

Pair Corralation between Zepp Health and Sharp

Given the investment horizon of 90 days Zepp Health Corp is expected to generate 4.06 times more return on investment than Sharp. However, Zepp Health is 4.06 times more volatile than Sharp. It trades about 0.05 of its potential returns per unit of risk. Sharp is currently generating about 0.13 per unit of risk. 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

Zepp Health Corp  vs.  Sharp

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.

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.

Pair Trading with Zepp Health and Sharp

The main advantage of trading using opposite Zepp Health and Sharp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zepp Health position performs unexpectedly, Sharp 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 Sharp will offset losses from the drop in Sharp's long position.

The idea behind Zepp Health Corp and Sharp 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.