Correlation Between NETGEAR and Zepp Health

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

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

Diversification Opportunities for NETGEAR and Zepp Health

-0.37

Correlation Coefficient

NETGEAR  Zepp Health

Very good diversification

The 3 months correlation between NETGEAR and Zepp is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR 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 NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and Zepp Health go up and down completely randomly.

Pair Corralation between NETGEAR and Zepp Health

Given the investment horizon of 90 days NETGEAR is expected to generate 19.07 times less return on investment than Zepp Health. But when comparing it to its historical volatility, NETGEAR is 4.34 times less risky than Zepp Health. It trades about 0.05 of its potential returns per unit of risk. Zepp Health Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  267.00  in Zepp Health Corp on April 29, 2025 and sell it today you would earn a total of  846.00  from holding Zepp Health Corp or generate 316.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

NETGEAR  vs.  Zepp Health Corp

NETGEAR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 18 (%) 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 NETGEAR and Zepp Health

The main advantage of trading using opposite NETGEAR and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.