Correlation Between Barnes and ZTO Express

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

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

Diversification Opportunities for Barnes and ZTO Express

0.45

Correlation Coefficient

Barnes  ZTO Express

Very weak diversification

The 3 months correlation between Barnes and ZTO is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and Barnes 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 Barnes Group 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 Barnes i.e., Barnes and ZTO Express go up and down completely randomly.

Pair Corralation between Barnes and ZTO Express

Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.04 times more return on investment than ZTO Express. However, Barnes Group is 26.31 times less risky than ZTO Express. It trades about 0.34 of its potential returns per unit of risk. ZTO Express is currently generating about 0.01 per unit of risk. If you would invest  4,717  in Barnes Group on December 17, 2024 and sell it today you would earn a total of  31.00  from holding Barnes Group or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	43.33%
Values	Daily Returns

Barnes Group  vs.  ZTO Express

Barnes Group

Risk-Adjusted Performance

Strong

Over the last 90 days Barnes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Barnes is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ZTO Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZTO Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ZTO Express is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Barnes and ZTO Express

The main advantage of trading using opposite Barnes and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes 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 Barnes Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.