Correlation Between Freightos Limited and ZTO Express

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

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

Diversification Opportunities for Freightos Limited and ZTO Express

-0.7

Correlation Coefficient

Freightos Limited  ZTO Express

Excellent diversification

The 3 months correlation between Freightos and ZTO is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Freightos Limited Ordinary and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and Freightos Limited 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 Freightos Limited Ordinary 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 Freightos Limited i.e., Freightos Limited and ZTO Express go up and down completely randomly.

Pair Corralation between Freightos Limited and ZTO Express

Given the investment horizon of 90 days Freightos Limited Ordinary is expected to generate 3.11 times more return on investment than ZTO Express. However, Freightos Limited is 3.11 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 -0.07 per unit of risk. If you would invest  154.00  in Freightos Limited Ordinary on September 4, 2024 and sell it today you would earn a total of  46.00  from holding Freightos Limited Ordinary or generate 29.87% return on investment over 90 days.

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

Freightos Limited Ordinary  vs.  ZTO Express

Freightos Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freightos Limited Ordinary are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Freightos Limited displayed 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. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Freightos Limited and ZTO Express

The main advantage of trading using opposite Freightos Limited and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightos Limited 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 Freightos Limited Ordinary 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.