Correlation Between SBI Insurance and ZTO Express

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

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

Diversification Opportunities for SBI Insurance and ZTO Express

-0.69

Correlation Coefficient

SBI Insurance  ZTO Express

Excellent diversification

The 3 months correlation between SBI and ZTO is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and SBI Insurance 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 SBI Insurance 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 SBI Insurance i.e., SBI Insurance and ZTO Express go up and down completely randomly.

Pair Corralation between SBI Insurance and ZTO Express

Assuming the 90 days trading horizon SBI Insurance Group is expected to generate 0.8 times more return on investment than ZTO Express. However, SBI Insurance Group is 1.25 times less risky than ZTO Express. It trades about 0.26 of its potential returns per unit of risk. ZTO Express is currently generating about -0.14 per unit of risk. If you would invest  550.00  in SBI Insurance Group on October 7, 2024 and sell it today you would earn a total of  100.00  from holding SBI Insurance Group or generate 18.18% return on investment over 90 days.

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

SBI Insurance Group  vs.  ZTO Express

SBI Insurance Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Insurance unveiled 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 fragile 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 SBI Insurance and ZTO Express

The main advantage of trading using opposite SBI Insurance and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance 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 SBI Insurance 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.