Correlation Between ZTO Express and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both ZTO Express and Reliance Steel 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 Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZTO Express and Reliance Steel Aluminum, you can compare the effects of market volatilities on ZTO Express and Reliance Steel 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 Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZTO Express and Reliance Steel.
Diversification Opportunities for ZTO Express and Reliance Steel
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ZTO and Reliance is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ZTO Express and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum 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 Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of ZTO Express i.e., ZTO Express and Reliance Steel go up and down completely randomly.
Pair Corralation between ZTO Express and Reliance Steel
Assuming the 90 days trading horizon ZTO Express is expected to under-perform the Reliance Steel. But the stock apears to be less risky and, when comparing its historical volatility, ZTO Express is 1.26 times less risky than Reliance Steel. The stock trades about -0.32 of its potential returns per unit of risk. The Reliance Steel Aluminum is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 26,491 in Reliance Steel Aluminum on September 1, 2024 and sell it today you would earn a total of 3,989 from holding Reliance Steel Aluminum or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ZTO Express vs. Reliance Steel Aluminum
Performance |
| Timeline |
| ZTO Express |
| Reliance Steel Aluminum |
ZTO Express and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZTO Express and Reliance Steel
The main advantage of trading using opposite ZTO Express and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZTO Express position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| ZTO Express vs. Pure Storage | ZTO Express vs. Plastic Omnium | ZTO Express vs. Datang International Power | ZTO Express vs. Compagnie Plastic Omnium |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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