Correlation Between ZTO EXPRESS and SINGAPORE POST

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

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

Diversification Opportunities for ZTO EXPRESS and SINGAPORE POST

-0.59

Correlation Coefficient

ZTO EXPRESS  SINGAPORE POST

Excellent diversification

The 3 months correlation between ZTO and SINGAPORE is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ZTO EXPRESS and SINGAPORE POST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE POST and ZTO EXPRESS 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 ZTO EXPRESS are associated (or correlated) with SINGAPORE POST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE POST has no effect on the direction of ZTO EXPRESS i.e., ZTO EXPRESS and SINGAPORE POST go up and down completely randomly.

Pair Corralation between ZTO EXPRESS and SINGAPORE POST

Assuming the 90 days trading horizon ZTO EXPRESS is expected to under-perform the SINGAPORE POST. In addition to that, ZTO EXPRESS is 1.18 times more volatile than SINGAPORE POST. It trades about 0.0 of its total potential returns per unit of risk. SINGAPORE POST is currently generating about 0.02 per unit of volatility. If you would invest  33.00  in SINGAPORE POST on September 23, 2024 and sell it today you would earn a total of  5.00  from holding SINGAPORE POST or generate 15.15% return on investment over 90 days.

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

ZTO EXPRESS  vs.  SINGAPORE POST

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. Despite nearly stable basic indicators, ZTO EXPRESS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SINGAPORE POST

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE POST are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SINGAPORE POST unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZTO EXPRESS and SINGAPORE POST

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

The idea behind ZTO EXPRESS and SINGAPORE POST 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.