Correlation Between SENKO GROUP and ZTO EXPRESS

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

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

Diversification Opportunities for SENKO GROUP and ZTO EXPRESS

-0.78

Correlation Coefficient

SENKO GROUP  ZTO EXPRESS

Pay attention - limited upside

The 3 months correlation between SENKO and ZTO is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding SENKO GROUP HOLDINGS and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS and SENKO GROUP 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 SENKO GROUP HOLDINGS 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 SENKO GROUP i.e., SENKO GROUP and ZTO EXPRESS go up and down completely randomly.

Pair Corralation between SENKO GROUP and ZTO EXPRESS

Assuming the 90 days horizon SENKO GROUP HOLDINGS is expected to under-perform the ZTO EXPRESS. But the stock apears to be less risky and, when comparing its historical volatility, SENKO GROUP HOLDINGS is 1.53 times less risky than ZTO EXPRESS. The stock trades about -0.05 of its potential returns per unit of risk. The ZTO EXPRESS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,820  in ZTO EXPRESS on September 24, 2024 and sell it today you would earn a total of  60.00  from holding ZTO EXPRESS or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SENKO GROUP HOLDINGS  vs.  ZTO EXPRESS

SENKO GROUP HOLDINGS

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SENKO GROUP HOLDINGS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SENKO GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable basic indicators, ZTO EXPRESS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SENKO GROUP and ZTO EXPRESS

The main advantage of trading using opposite SENKO GROUP and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENKO GROUP 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 SENKO GROUP HOLDINGS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.