Correlation Between Petroleo Brasileiro and ZTO EXPRESS
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro 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 Petroleo Brasileiro and ZTO EXPRESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and ZTO EXPRESS, you can compare the effects of market volatilities on Petroleo Brasileiro 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 Petroleo Brasileiro with a short position of ZTO EXPRESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and ZTO EXPRESS.
Diversification Opportunities for Petroleo Brasileiro and ZTO EXPRESS
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petroleo and ZTO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS and Petroleo Brasileiro 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 Petroleo Brasileiro Petrobras 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 Petroleo Brasileiro i.e., Petroleo Brasileiro and ZTO EXPRESS go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and ZTO EXPRESS
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 1.91 times less return on investment than ZTO EXPRESS. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 1.69 times less risky than ZTO EXPRESS. It trades about 0.02 of its potential returns per unit of risk. ZTO EXPRESS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,670 in ZTO EXPRESS on September 12, 2024 and sell it today you would earn a total of 100.00 from holding ZTO EXPRESS or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. ZTO EXPRESS
Performance |
| Timeline |
| Petroleo Brasileiro |
| ZTO EXPRESS |
Petroleo Brasileiro and ZTO EXPRESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and ZTO EXPRESS
The main advantage of trading using opposite Petroleo Brasileiro and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro 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.| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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