Correlation Between ZKH Group and IPower

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

By analyzing existing cross correlation between ZKH Group Limited and iPower Inc, you can compare the effects of market volatilities on ZKH Group and IPower 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 ZKH Group with a short position of IPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKH Group and IPower.

Diversification Opportunities for ZKH Group and IPower

0.49

Correlation Coefficient

ZKH Group  IPower

Very weak diversification

The 3 months correlation between ZKH and IPower is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ZKH Group Limited and iPower Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPower Inc and ZKH Group 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 ZKH Group Limited are associated (or correlated) with IPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPower Inc has no effect on the direction of ZKH Group i.e., ZKH Group and IPower go up and down completely randomly.

Pair Corralation between ZKH Group and IPower

Considering the 90-day investment horizon ZKH Group Limited is expected to generate 0.53 times more return on investment than IPower. However, ZKH Group Limited is 1.87 times less risky than IPower. It trades about 0.15 of its potential returns per unit of risk. iPower Inc is currently generating about 0.02 per unit of risk. If you would invest  334.00  in ZKH Group Limited on October 25, 2024 and sell it today you would earn a total of  22.00  from holding ZKH Group Limited or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

ZKH Group Limited  vs.  iPower Inc

ZKH Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKH Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, ZKH Group is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

iPower Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPower Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with ZKH Group and IPower

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

The idea behind ZKH Group Limited and iPower Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.