Correlation Between Postal Savings and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both Postal Savings and Strategic Investments 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 Postal Savings and Strategic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and Strategic Investments AS, you can compare the effects of market volatilities on Postal Savings and Strategic Investments 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 Postal Savings with a short position of Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Strategic Investments.
Diversification Opportunities for Postal Savings and Strategic Investments
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Postal and Strategic is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Postal Savings i.e., Postal Savings and Strategic Investments go up and down completely randomly.
Pair Corralation between Postal Savings and Strategic Investments
Assuming the 90 days horizon Postal Savings Bank is expected to generate 0.52 times more return on investment than Strategic Investments. However, Postal Savings Bank is 1.93 times less risky than Strategic Investments. It trades about 0.05 of its potential returns per unit of risk. Strategic Investments AS is currently generating about 0.02 per unit of risk. If you would invest 52.00 in Postal Savings Bank on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Postal Savings Bank or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Postal Savings Bank vs. Strategic Investments AS
Performance |
| Timeline |
| Postal Savings Bank |
| Strategic Investments |
Postal Savings and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and Strategic Investments
The main advantage of trading using opposite Postal Savings and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| Postal Savings vs. Deutsche Bank Aktiengesellschaft | Postal Savings vs. Superior Plus Corp | Postal Savings vs. NMI Holdings | Postal Savings vs. Origin Agritech |
| Strategic Investments vs. The Bank of | Strategic Investments vs. Superior Plus Corp | Strategic Investments vs. NMI Holdings | Strategic Investments vs. Origin Agritech |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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