Correlation Between Radiant Logistics and ZTO Express

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

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

Diversification Opportunities for Radiant Logistics and ZTO Express

-0.32

Correlation Coefficient

Radiant Logistics  ZTO Express

Very good diversification

The 3 months correlation between Radiant and ZTO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Logistics and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and Radiant Logistics 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 Radiant Logistics 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 Radiant Logistics i.e., Radiant Logistics and ZTO Express go up and down completely randomly.

Pair Corralation between Radiant Logistics and ZTO Express

Given the investment horizon of 90 days Radiant Logistics is expected to under-perform the ZTO Express. But the stock apears to be less risky and, when comparing its historical volatility, Radiant Logistics is 1.05 times less risky than ZTO Express. The stock trades about -0.06 of its potential returns per unit of risk. The ZTO Express is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,991  in ZTO Express on December 26, 2024 and sell it today you would lose (2.00) from holding ZTO Express or give up 0.1% of portfolio value over 90 days.

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

Radiant Logistics  vs.  ZTO Express

Radiant Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Radiant Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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 Radiant Logistics and ZTO Express

The main advantage of trading using opposite Radiant Logistics and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radiant Logistics 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 Radiant Logistics 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .