Correlation Between Ebang International and Zepp Health

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

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

Diversification Opportunities for Ebang International and Zepp Health

-0.37

Correlation Coefficient

Ebang International  Zepp Health

Very good diversification

The 3 months correlation between Ebang and Zepp is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ebang International Holdings and Zepp Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zepp Health Corp and Ebang International 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 Ebang International Holdings are associated (or correlated) with Zepp Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zepp Health Corp has no effect on the direction of Ebang International i.e., Ebang International and Zepp Health go up and down completely randomly.

Pair Corralation between Ebang International and Zepp Health

Given the investment horizon of 90 days Ebang International Holdings is expected to generate 1.07 times more return on investment than Zepp Health. However, Ebang International is 1.07 times more volatile than Zepp Health Corp. It trades about 0.09 of its potential returns per unit of risk. Zepp Health Corp is currently generating about -0.01 per unit of risk. If you would invest  593.00  in Ebang International Holdings on August 31, 2024 and sell it today you would earn a total of  152.00  from holding Ebang International Holdings or generate 25.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ebang International Holdings  vs.  Zepp Health Corp

Ebang International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ebang International Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ebang International displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Ebang International and Zepp Health

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

The idea behind Ebang International Holdings and Zepp Health Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.