Correlation Between INDO RAMA and ZTO EXPRESS

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

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

Diversification Opportunities for INDO RAMA and ZTO EXPRESS

0.0

Correlation Coefficient

INDO RAMA  ZTO EXPRESS

Pay attention - limited upside

The 3 months correlation between INDO and ZTO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INDO RAMA SYNTHETIC and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS and INDO RAMA 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 INDO RAMA SYNTHETIC 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 INDO RAMA i.e., INDO RAMA and ZTO EXPRESS go up and down completely randomly.

Pair Corralation between INDO RAMA and ZTO EXPRESS

Assuming the 90 days trading horizon INDO RAMA SYNTHETIC is expected to under-perform the ZTO EXPRESS. In addition to that, INDO RAMA is 1.13 times more volatile than ZTO EXPRESS. It trades about -0.02 of its total potential returns per unit of risk. ZTO EXPRESS is currently generating about -0.01 per unit of volatility. If you would invest  2,450  in ZTO EXPRESS on October 10, 2024 and sell it today you would lose (650.00) from holding ZTO EXPRESS or give up 26.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

INDO RAMA SYNTHETIC  vs.  ZTO EXPRESS

INDO RAMA SYNTHETIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDO RAMA SYNTHETIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, INDO RAMA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 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.

Pair Trading with INDO RAMA and ZTO EXPRESS

The main advantage of trading using opposite INDO RAMA and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDO RAMA 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.

The idea behind INDO RAMA SYNTHETIC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.