Correlation Between ZKH Group and Fortress Transp

Can any of the company-specific risk be diversified away by investing in both ZKH Group and Fortress Transp 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 ZKH Group and Fortress Transp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZKH Group Limited and Fortress Transp Infra, you can compare the effects of market volatilities on ZKH Group and Fortress Transp 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 ZKH Group with a short position of Fortress Transp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKH Group and Fortress Transp.

Diversification Opportunities for ZKH Group and Fortress Transp

-0.15

Correlation Coefficient

ZKH Group  Fortress Transp

Good diversification

The 3 months correlation between ZKH and Fortress is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ZKH Group Limited and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra and ZKH Group 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 ZKH Group Limited are associated (or correlated) with Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of ZKH Group i.e., ZKH Group and Fortress Transp go up and down completely randomly.

Pair Corralation between ZKH Group and Fortress Transp

Considering the 90-day investment horizon ZKH Group Limited is expected to under-perform the Fortress Transp. But the stock apears to be less risky and, when comparing its historical volatility, ZKH Group Limited is 3.41 times less risky than Fortress Transp. The stock trades about -0.01 of its potential returns per unit of risk. The Fortress Transp Infra is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12,613  in Fortress Transp Infra on December 28, 2024 and sell it today you would lose (1,213) from holding Fortress Transp Infra or give up 9.62% of portfolio value over 90 days.

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

ZKH Group Limited  vs.  Fortress Transp Infra

ZKH Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZKH Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, ZKH Group is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Fortress Transp Infra

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transp Infra are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Fortress Transp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ZKH Group and Fortress Transp

The main advantage of trading using opposite ZKH Group and Fortress Transp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZKH Group position performs unexpectedly, Fortress Transp 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 Fortress Transp will offset losses from the drop in Fortress Transp's long position.

The idea behind ZKH Group Limited and Fortress Transp Infra 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.