Correlation Between Zepp Health and Vuzix Corp

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

Diversification Opportunities for Zepp Health and Vuzix Corp

-0.53

Correlation Coefficient

Zepp Health  Vuzix Corp

Excellent diversification

The 3 months correlation between Zepp and Vuzix is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zepp Health Corp and Vuzix Corp Cmn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vuzix Corp Cmn 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 Vuzix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vuzix Corp Cmn has no effect on the direction of Zepp Health i.e., Zepp Health and Vuzix Corp go up and down completely randomly.

Pair Corralation between Zepp Health and Vuzix Corp

Given the investment horizon of 90 days Zepp Health Corp is expected to under-perform the Vuzix Corp. But the stock apears to be less risky and, when comparing its historical volatility, Zepp Health Corp is 1.2 times less risky than Vuzix Corp. The stock trades about -0.02 of its potential returns per unit of risk. The Vuzix Corp Cmn is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  411.00  in Vuzix Corp Cmn on September 30, 2024 and sell it today you would earn a total of  114.00  from holding Vuzix Corp Cmn or generate 27.74% return on investment over 90 days.

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

Zepp Health Corp  vs.  Vuzix Corp Cmn

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Vuzix Corp Cmn

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vuzix Corp Cmn are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Vuzix Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zepp Health and Vuzix Corp

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

The idea behind Zepp Health Corp and Vuzix Corp Cmn 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.