Correlation Between Zepp Health and Sharp Corp

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

Diversification Opportunities for Zepp Health and Sharp Corp

0.22

Correlation Coefficient

Zepp Health  Sharp Corp

Modest diversification

The 3 months correlation between Zepp and Sharp is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zepp Health Corp and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR 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 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of Zepp Health i.e., Zepp Health and Sharp Corp go up and down completely randomly.

Pair Corralation between Zepp Health and Sharp Corp

Given the investment horizon of 90 days Zepp Health is expected to generate 10.99 times less return on investment than Sharp Corp. In addition to that, Zepp Health is 1.05 times more volatile than Sharp Corp ADR. It trades about 0.0 of its total potential returns per unit of risk. Sharp Corp ADR is currently generating about 0.02 per unit of volatility. 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

Zepp Health Corp  vs.  Sharp Corp ADR

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.

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.

Pair Trading with Zepp Health and Sharp Corp

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

The idea behind Zepp Health Corp and Sharp Corp ADR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.