Correlation Between ZKH Group and Qurate Retail

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

Diversification Opportunities for ZKH Group and Qurate Retail

-0.02

Correlation Coefficient

ZKH Group  Qurate Retail

Good diversification

The 3 months correlation between ZKH and Qurate is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ZKH Group Limited and Qurate Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail 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 Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail has no effect on the direction of ZKH Group i.e., ZKH Group and Qurate Retail go up and down completely randomly.

Pair Corralation between ZKH Group and Qurate Retail

Considering the 90-day investment horizon ZKH Group Limited is expected to generate 1.54 times more return on investment than Qurate Retail. However, ZKH Group is 1.54 times more volatile than Qurate Retail. It trades about -0.04 of its potential returns per unit of risk. Qurate Retail is currently generating about -0.23 per unit of risk. If you would invest  369.00  in ZKH Group Limited on September 30, 2024 and sell it today you would lose (34.00) from holding ZKH Group Limited or give up 9.21% of portfolio value over 90 days.

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

ZKH Group Limited  vs.  Qurate Retail

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 latest abnormal performance, the Stock's forward-looking signals remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Qurate Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qurate Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's technical and fundamental 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.

Pair Trading with ZKH Group and Qurate Retail

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

The idea behind ZKH Group Limited and Qurate Retail 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.