Correlation Between ZTO EXPRESS and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both ZTO EXPRESS and NorAm Drilling 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 NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZTO EXPRESS and NorAm Drilling AS, you can compare the effects of market volatilities on ZTO EXPRESS and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZTO EXPRESS and NorAm Drilling.
Diversification Opportunities for ZTO EXPRESS and NorAm Drilling
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZTO and NorAm is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ZTO EXPRESS and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of ZTO EXPRESS i.e., ZTO EXPRESS and NorAm Drilling go up and down completely randomly.
Pair Corralation between ZTO EXPRESS and NorAm Drilling
Assuming the 90 days trading horizon ZTO EXPRESS is expected to under-perform the NorAm Drilling. But the stock apears to be less risky and, when comparing its historical volatility, ZTO EXPRESS is 3.36 times less risky than NorAm Drilling. The stock trades about -0.32 of its potential returns per unit of risk. The NorAm Drilling AS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 304.00 in NorAm Drilling AS on September 5, 2024 and sell it today you would lose (16.00) from holding NorAm Drilling AS or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ZTO EXPRESS vs. NorAm Drilling AS
Performance |
| Timeline |
| ZTO EXPRESS |
| NorAm Drilling AS |
ZTO EXPRESS and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZTO EXPRESS and NorAm Drilling
The main advantage of trading using opposite ZTO EXPRESS and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZTO EXPRESS position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.| ZTO EXPRESS vs. Kuehne Nagel International | ZTO EXPRESS vs. Superior Plus Corp | ZTO EXPRESS vs. NMI Holdings | ZTO EXPRESS vs. Origin Agritech |
| NorAm Drilling vs. THAI BEVERAGE | NorAm Drilling vs. Cogent Communications Holdings | NorAm Drilling vs. Gamma Communications plc | NorAm Drilling vs. Ribbon Communications |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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