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

-0.34

Correlation Coefficient

ZKH Group  Qurate Retail

Very good diversification

The 3 months correlation between ZKH and Qurate is -0.34. 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 under-perform the Qurate Retail. In addition to that, ZKH Group is 2.59 times more volatile than Qurate Retail. It trades about -0.06 of its total potential returns per unit of risk. Qurate Retail is currently generating about 0.05 per unit of volatility. If you would invest  2,918  in Qurate Retail on September 12, 2024 and sell it today you would earn a total of  772.00  from holding Qurate Retail or generate 26.46% return on investment 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

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZKH Group Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal forward-looking signals, ZKH Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 relatively invariable technical and fundamental indicators, Qurate Retail 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 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.