Correlation Between Prosafe SE and ZTO Express

Can any of the company-specific risk be diversified away by investing in both Prosafe SE 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 Prosafe SE and ZTO Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prosafe SE and ZTO Express, you can compare the effects of market volatilities on Prosafe SE 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 Prosafe SE with a short position of ZTO Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and ZTO Express.

Diversification Opportunities for Prosafe SE and ZTO Express

0.93

Correlation Coefficient

Prosafe SE  ZTO Express

Almost no diversification

The 3 months correlation between Prosafe and ZTO is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and Prosafe SE 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 Prosafe SE 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 Prosafe SE i.e., Prosafe SE and ZTO Express go up and down completely randomly.

Pair Corralation between Prosafe SE and ZTO Express

Assuming the 90 days horizon Prosafe SE is expected to generate 9.58 times more return on investment than ZTO Express. However, Prosafe SE is 9.58 times more volatile than ZTO Express. It trades about 0.09 of its potential returns per unit of risk. ZTO Express is currently generating about 0.09 per unit of risk. If you would invest  54.00  in Prosafe SE on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Prosafe SE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Prosafe SE  vs.  ZTO Express

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ZTO Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZTO Express has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Prosafe SE and ZTO Express

The main advantage of trading using opposite Prosafe SE and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE 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' long position.

The idea behind Prosafe SE and ZTO Express pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.