Correlation Between ZTO Express and Volkswagen
Can any of the company-specific risk be diversified away by investing in both ZTO Express and Volkswagen 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 Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZTO Express and Volkswagen AG, you can compare the effects of market volatilities on ZTO Express and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZTO Express and Volkswagen.
Diversification Opportunities for ZTO Express and Volkswagen
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZTO and Volkswagen is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ZTO Express and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of ZTO Express i.e., ZTO Express and Volkswagen go up and down completely randomly.
Pair Corralation between ZTO Express and Volkswagen
Assuming the 90 days trading horizon ZTO Express is expected to generate 1.45 times more return on investment than Volkswagen. However, ZTO Express is 1.45 times more volatile than Volkswagen AG. It trades about -0.05 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.22 per unit of risk. If you would invest 2,063 in ZTO Express on September 1, 2024 and sell it today you would lose (333.00) from holding ZTO Express or give up 16.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZTO Express vs. Volkswagen AG
Performance |
| Timeline |
| ZTO Express |
| Volkswagen AG |
ZTO Express and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZTO Express and Volkswagen
The main advantage of trading using opposite ZTO Express and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZTO Express position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen'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 |
| Volkswagen vs. SIVERS SEMICONDUCTORS AB | Volkswagen vs. Darden Restaurants | Volkswagen vs. Reliance Steel Aluminum | Volkswagen vs. Q2M Managementberatung AG |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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