Correlation Between PACCAR and ZoomLion

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

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

Diversification Opportunities for PACCAR and ZoomLion

0.82

Correlation Coefficient

PACCAR  ZoomLion

Very poor diversification

The 3 months correlation between PACCAR and ZoomLion is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and ZoomLion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZoomLion and PACCAR 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 PACCAR Inc are associated (or correlated) with ZoomLion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZoomLion has no effect on the direction of PACCAR i.e., PACCAR and ZoomLion go up and down completely randomly.

Pair Corralation between PACCAR and ZoomLion

Given the investment horizon of 90 days PACCAR is expected to generate 1.7 times less return on investment than ZoomLion. But when comparing it to its historical volatility, PACCAR Inc is 1.55 times less risky than ZoomLion. It trades about 0.08 of its potential returns per unit of risk. ZoomLion is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  687.00  in ZoomLion on May 4, 2025 and sell it today you would earn a total of  92.00  from holding ZoomLion or generate 13.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

PACCAR Inc  vs.  ZoomLion

PACCAR Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, PACCAR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

ZoomLion

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZoomLion are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, ZoomLion showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PACCAR and ZoomLion

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

The idea behind PACCAR Inc and ZoomLion 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.