Correlation Between A2Z Smart and ZTO Express

Can any of the company-specific risk be diversified away by investing in both A2Z Smart and ZTO Express 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 A2Z Smart and ZTO Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A2Z Smart Technologies and ZTO Express, you can compare the effects of market volatilities on A2Z Smart and ZTO Express 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 A2Z Smart with a short position of ZTO Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2Z Smart and ZTO Express.

Diversification Opportunities for A2Z Smart and ZTO Express

-0.43

Correlation Coefficient

A2Z Smart  ZTO Express

Very good diversification

The 3 months correlation between A2Z and ZTO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding A2Z Smart Technologies and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and A2Z Smart 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 A2Z Smart Technologies are associated (or correlated) with ZTO Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTO Express has no effect on the direction of A2Z Smart i.e., A2Z Smart and ZTO Express go up and down completely randomly.

Pair Corralation between A2Z Smart and ZTO Express

Allowing for the 90-day total investment horizon A2Z Smart Technologies is expected to generate 2.76 times more return on investment than ZTO Express. However, A2Z Smart is 2.76 times more volatile than ZTO Express. It trades about 0.3 of its potential returns per unit of risk. ZTO Express is currently generating about -0.42 per unit of risk. If you would invest  492.00  in A2Z Smart Technologies on September 4, 2024 and sell it today you would earn a total of  167.00  from holding A2Z Smart Technologies or generate 33.94% return on investment over 90 days.

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

A2Z Smart Technologies  vs.  ZTO Express

A2Z Smart Technologies

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, A2Z Smart showed solid returns over the last few months and may actually be approaching a breakup point.

ZTO Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZTO Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with A2Z Smart and ZTO Express

The main advantage of trading using opposite A2Z Smart and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2Z Smart position performs unexpectedly, ZTO Express 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 ZTO Express will offset losses from the drop in ZTO Express' long position.

The idea behind A2Z Smart Technologies and ZTO Express 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.