Correlation Between Flex and Zepp Health

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

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

Diversification Opportunities for Flex and Zepp Health

0.64

Correlation Coefficient

Flex  Zepp Health

Poor diversification

The 3 months correlation between Flex and Zepp is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Flex 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 Flex 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 Flex 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 Flex i.e., Flex and Zepp Health go up and down completely randomly.

Pair Corralation between Flex and Zepp Health

Given the investment horizon of 90 days Flex is expected to generate 12.85 times less return on investment than Zepp Health. But when comparing it to its historical volatility, Flex is 7.93 times less risky than Zepp Health. It trades about 0.19 of its potential returns per unit of risk. Zepp Health Corp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  284.00  in Zepp Health Corp on May 10, 2025 and sell it today you would earn a total of  2,146  from holding Zepp Health Corp or generate 755.63% return on investment over 90 days.

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

Flex  vs.  Zepp Health Corp

Flex

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flex are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Zepp Health Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zepp Health Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Zepp Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flex and Zepp Health

The main advantage of trading using opposite Flex and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex 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 Flex 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.