Correlation Between ZTO EXPRESS and Eidesvik Offshore

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

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

Diversification Opportunities for ZTO EXPRESS and Eidesvik Offshore

0.54

Correlation Coefficient

ZTO EXPRESS  Eidesvik Offshore

Very weak diversification

The 3 months correlation between ZTO and Eidesvik is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ZTO EXPRESS and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and ZTO EXPRESS 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 ZTO EXPRESS are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of ZTO EXPRESS i.e., ZTO EXPRESS and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between ZTO EXPRESS and Eidesvik Offshore

Assuming the 90 days trading horizon ZTO EXPRESS is expected to under-perform the Eidesvik Offshore. In addition to that, ZTO EXPRESS is 1.07 times more volatile than Eidesvik Offshore ASA. It trades about -0.21 of its total potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.06 per unit of volatility. If you would invest  122.00  in Eidesvik Offshore ASA on October 10, 2024 and sell it today you would lose (9.00) from holding Eidesvik Offshore ASA or give up 7.38% of portfolio value over 90 days.

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

ZTO EXPRESS  vs.  Eidesvik Offshore ASA

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eidesvik Offshore ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eidesvik Offshore ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with ZTO EXPRESS and Eidesvik Offshore

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

The idea behind ZTO EXPRESS and Eidesvik Offshore ASA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.