Correlation Between Cleanaway Waste and ZTO Express

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

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

Diversification Opportunities for Cleanaway Waste and ZTO Express

-0.21

Correlation Coefficient

Cleanaway Waste  ZTO Express

Very good diversification

The 3 months correlation between Cleanaway and ZTO is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and Cleanaway Waste 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 Cleanaway Waste Management 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 Cleanaway Waste i.e., Cleanaway Waste and ZTO Express go up and down completely randomly.

Pair Corralation between Cleanaway Waste and ZTO Express

Assuming the 90 days trading horizon Cleanaway Waste Management is expected to under-perform the ZTO Express. In addition to that, Cleanaway Waste is 1.11 times more volatile than ZTO Express. It trades about -0.05 of its total potential returns per unit of risk. ZTO Express is currently generating about -0.02 per unit of volatility. If you would invest  1,870  in ZTO Express on December 21, 2024 and sell it today you would lose (80.00) from holding ZTO Express or give up 4.28% of portfolio value over 90 days.

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

Cleanaway Waste Management  vs.  ZTO Express

Cleanaway Waste Mana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic 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. 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 Cleanaway Waste and ZTO Express

The main advantage of trading using opposite Cleanaway Waste and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleanaway Waste 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 Cleanaway Waste Management 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.