Correlation Between Zepp Health and Casio Computer

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

Diversification Opportunities for Zepp Health and Casio Computer

0.5

Correlation Coefficient

Zepp Health  Casio Computer

Very weak diversification

The 3 months correlation between Zepp and Casio is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Zepp Health Corp and Casio Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer has no effect on the direction of Zepp Health i.e., Zepp Health and Casio Computer go up and down completely randomly.

Pair Corralation between Zepp Health and Casio Computer

Given the investment horizon of 90 days Zepp Health Corp is expected to generate 1.95 times more return on investment than Casio Computer. However, Zepp Health is 1.95 times more volatile than Casio Computer Co. It trades about 0.03 of its potential returns per unit of risk. Casio Computer Co is currently generating about -0.04 per unit of risk. If you would invest  314.00  in Zepp Health Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Zepp Health Corp or generate 0.0% return on investment over 90 days.

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

Zepp Health Corp  vs.  Casio Computer Co

Zepp Health Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zepp Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Zepp Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Casio Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casio Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Zepp Health and Casio Computer

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

The idea behind Zepp Health Corp and Casio Computer Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.