Correlation Between GoPro and Zepp Health
Can any of the company-specific risk be diversified away by investing in both GoPro 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 GoPro and Zepp Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoPro Inc and Zepp Health Corp, you can compare the effects of market volatilities on GoPro 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 GoPro with a short position of Zepp Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and Zepp Health.
Diversification Opportunities for GoPro and Zepp Health
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GoPro and Zepp is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc 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 GoPro 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 GoPro Inc 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 GoPro i.e., GoPro and Zepp Health go up and down completely randomly.
Pair Corralation between GoPro and Zepp Health
Given the investment horizon of 90 days GoPro Inc is expected to under-perform the Zepp Health. But the stock apears to be less risky and, when comparing its historical volatility, GoPro Inc is 1.56 times less risky than Zepp Health. The stock trades about -0.29 of its potential returns per unit of risk. The Zepp Health Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 287.00 in Zepp Health Corp on November 3, 2024 and sell it today you would lose (7.00) from holding Zepp Health Corp or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoPro Inc vs. Zepp Health Corp
Performance |
| Timeline |
| GoPro Inc |
| Zepp Health Corp |
GoPro and Zepp Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoPro and Zepp Health
The main advantage of trading using opposite GoPro and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro 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.| GoPro vs. Sony Group Corp | GoPro vs. LG Display Co | GoPro vs. Universal Electronics | GoPro vs. VOXX International |
| Zepp Health vs. VOXX International | Zepp Health vs. LG Display Co | Zepp Health vs. Emerson Radio | Zepp Health vs. Universal Electronics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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