Correlation Between Kuehne Nagel and ZTO EXPRESS

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

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

Diversification Opportunities for Kuehne Nagel and ZTO EXPRESS

0.59

Correlation Coefficient

Kuehne Nagel  ZTO EXPRESS

Very weak diversification

The 3 months correlation between Kuehne and ZTO is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kuehne Nagel International and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS and Kuehne Nagel 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 Kuehne Nagel International 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 Kuehne Nagel i.e., Kuehne Nagel and ZTO EXPRESS go up and down completely randomly.

Pair Corralation between Kuehne Nagel and ZTO EXPRESS

Assuming the 90 days trading horizon Kuehne Nagel International is expected to under-perform the ZTO EXPRESS. But the stock apears to be less risky and, when comparing its historical volatility, Kuehne Nagel International is 2.27 times less risky than ZTO EXPRESS. The stock trades about -0.12 of its potential returns per unit of risk. The ZTO EXPRESS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,040  in ZTO EXPRESS on September 24, 2024 and sell it today you would lose (160.00) from holding ZTO EXPRESS or give up 7.84% of portfolio value over 90 days.

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

Kuehne Nagel International  vs.  ZTO EXPRESS

Kuehne Nagel Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuehne Nagel International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Kuehne Nagel and ZTO EXPRESS

The main advantage of trading using opposite Kuehne Nagel and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuehne Nagel 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 Kuehne Nagel International 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.