Correlation Between Sino AG and ZTO EXPRESS
Can any of the company-specific risk be diversified away by investing in both Sino AG 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 Sino AG and ZTO EXPRESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino AG and ZTO EXPRESS, you can compare the effects of market volatilities on Sino AG 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 Sino AG with a short position of ZTO EXPRESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino AG and ZTO EXPRESS.
Diversification Opportunities for Sino AG and ZTO EXPRESS
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sino and ZTO is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sino AG and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS and Sino AG 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 Sino AG 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 Sino AG i.e., Sino AG and ZTO EXPRESS go up and down completely randomly.
Pair Corralation between Sino AG and ZTO EXPRESS
Assuming the 90 days horizon Sino AG is expected to generate 0.83 times more return on investment than ZTO EXPRESS. However, Sino AG is 1.21 times less risky than ZTO EXPRESS. It trades about 0.12 of its potential returns per unit of risk. ZTO EXPRESS is currently generating about -0.01 per unit of risk. If you would invest 2,840 in Sino AG on April 20, 2025 and sell it today you would earn a total of 7,710 from holding Sino AG or generate 271.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sino AG vs. ZTO EXPRESS
Performance |
| Timeline |
| Sino AG |
| ZTO EXPRESS |
Sino AG and ZTO EXPRESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino AG and ZTO EXPRESS
The main advantage of trading using opposite Sino AG and ZTO EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino AG 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.| Microsoft vs. Sino AG | ||
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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Sino AG as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Sino AG's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Sino AG's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Sino AG.
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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