Correlation Between AIA Group and ZTO EXPRESS

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

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

Diversification Opportunities for AIA Group and ZTO EXPRESS

-0.54

Correlation Coefficient

AIA Group  ZTO EXPRESS

Excellent diversification

The 3 months correlation between AIA and ZTO is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AIA Group Limited and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS and AIA 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 AIA Group Limited 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 AIA Group i.e., AIA Group and ZTO EXPRESS go up and down completely randomly.

Pair Corralation between AIA Group and ZTO EXPRESS

Assuming the 90 days horizon AIA Group Limited is expected to generate 0.76 times more return on investment than ZTO EXPRESS. However, AIA Group Limited is 1.32 times less risky than ZTO EXPRESS. It trades about 0.18 of its potential returns per unit of risk. ZTO EXPRESS is currently generating about 0.01 per unit of risk. If you would invest  593.00  in AIA Group Limited on April 20, 2025 and sell it today you would earn a total of  158.00  from holding AIA Group Limited or generate 26.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

AIA Group Limited  vs.  ZTO EXPRESS

AIA Group Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIA Group Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, AIA Group reported solid returns over the last few months and may actually be approaching a breakup point.

ZTO EXPRESS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZTO EXPRESS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ZTO EXPRESS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AIA Group and ZTO EXPRESS

The main advantage of trading using opposite AIA Group and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIA Group 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's long position.

The idea behind AIA Group Limited 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 CEOs Directory module to screen CEOs from public companies around the world.