Correlation Between NIKKON HOLDINGS and ZTO EXPRESS
Can any of the company-specific risk be diversified away by investing in both NIKKON HOLDINGS 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 NIKKON HOLDINGS and ZTO EXPRESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKKON HOLDINGS TD and ZTO EXPRESS, you can compare the effects of market volatilities on NIKKON HOLDINGS 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 NIKKON HOLDINGS with a short position of ZTO EXPRESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKKON HOLDINGS and ZTO EXPRESS.
Diversification Opportunities for NIKKON HOLDINGS and ZTO EXPRESS
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NIKKON and ZTO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding NIKKON HOLDINGS TD and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS and NIKKON HOLDINGS 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 NIKKON HOLDINGS TD 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 NIKKON HOLDINGS i.e., NIKKON HOLDINGS and ZTO EXPRESS go up and down completely randomly.
Pair Corralation between NIKKON HOLDINGS and ZTO EXPRESS
Assuming the 90 days horizon NIKKON HOLDINGS TD is expected to generate 0.51 times more return on investment than ZTO EXPRESS. However, NIKKON HOLDINGS TD is 1.96 times less risky than ZTO EXPRESS. It trades about 0.08 of its potential returns per unit of risk. ZTO EXPRESS is currently generating about 0.02 per unit of risk. If you would invest 940.00 in NIKKON HOLDINGS TD on September 12, 2024 and sell it today you would earn a total of 300.00 from holding NIKKON HOLDINGS TD or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIKKON HOLDINGS TD vs. ZTO EXPRESS
Performance |
| Timeline |
| NIKKON HOLDINGS TD |
| ZTO EXPRESS |
NIKKON HOLDINGS and ZTO EXPRESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKKON HOLDINGS and ZTO EXPRESS
The main advantage of trading using opposite NIKKON HOLDINGS and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKKON HOLDINGS 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's long position.| NIKKON HOLDINGS vs. NTG Nordic Transport | NIKKON HOLDINGS vs. Superior Plus Corp | NIKKON HOLDINGS vs. SIVERS SEMICONDUCTORS AB | NIKKON HOLDINGS vs. NorAm Drilling AS |
| ZTO EXPRESS vs. NTG Nordic Transport | ZTO EXPRESS vs. Superior Plus Corp | ZTO EXPRESS vs. SIVERS SEMICONDUCTORS AB | ZTO EXPRESS vs. NorAm Drilling AS |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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