Correlation Between Postal Savings and STHREE PLC
Can any of the company-specific risk be diversified away by investing in both Postal Savings and STHREE PLC 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 STHREE PLC 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 STHREE PLC LS, you can compare the effects of market volatilities on Postal Savings and STHREE PLC 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 STHREE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and STHREE PLC.
Diversification Opportunities for Postal Savings and STHREE PLC
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Postal and STHREE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and STHREE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STHREE PLC LS 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 STHREE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STHREE PLC LS has no effect on the direction of Postal Savings i.e., Postal Savings and STHREE PLC go up and down completely randomly.
Pair Corralation between Postal Savings and STHREE PLC
Assuming the 90 days horizon Postal Savings Bank is expected to generate 4.0 times more return on investment than STHREE PLC. However, Postal Savings is 4.0 times more volatile than STHREE PLC LS. It trades about 0.25 of its potential returns per unit of risk. STHREE PLC LS is currently generating about 0.16 per unit of risk. If you would invest 40.00 in Postal Savings Bank on October 20, 2024 and sell it today you would earn a total of 16.00 from holding Postal Savings Bank or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Savings Bank vs. STHREE PLC LS
Performance |
| Timeline |
| Postal Savings Bank |
| STHREE PLC LS |
Postal Savings and STHREE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and STHREE PLC
The main advantage of trading using opposite Postal Savings and STHREE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, STHREE PLC 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 STHREE PLC will offset losses from the drop in STHREE PLC's long position.| Postal Savings vs. CarsalesCom | Postal Savings vs. FLOW TRADERS LTD | Postal Savings vs. Summit Hotel Properties | Postal Savings vs. Salesforce |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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