Correlation Between Pitney Bowes and ZTO Express

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

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

Diversification Opportunities for Pitney Bowes and ZTO Express

-0.43

Correlation Coefficient

Pitney Bowes  ZTO Express

Very good diversification

The 3 months correlation between Pitney and ZTO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pitney Bowes and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and Pitney Bowes 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 Pitney Bowes 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 Pitney Bowes i.e., Pitney Bowes and ZTO Express go up and down completely randomly.

Pair Corralation between Pitney Bowes and ZTO Express

Considering the 90-day investment horizon Pitney Bowes is expected to generate 1.69 times more return on investment than ZTO Express. However, Pitney Bowes is 1.69 times more volatile than ZTO Express. It trades about 0.05 of its potential returns per unit of risk. ZTO Express is currently generating about -0.03 per unit of risk. If you would invest  424.00  in Pitney Bowes on October 25, 2024 and sell it today you would earn a total of  308.00  from holding Pitney Bowes or generate 72.64% return on investment over 90 days.

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

Pitney Bowes  vs.  ZTO Express

Pitney Bowes

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pitney Bowes are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Pitney Bowes is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pitney Bowes and ZTO Express

The main advantage of trading using opposite Pitney Bowes and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pitney Bowes 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 Pitney Bowes 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.