Correlation Between DATANG INTL and Postal Savings
Can any of the company-specific risk be diversified away by investing in both DATANG INTL and Postal Savings 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 DATANG INTL and Postal Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATANG INTL POW and Postal Savings Bank, you can compare the effects of market volatilities on DATANG INTL and Postal Savings 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 DATANG INTL with a short position of Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and Postal Savings.
Diversification Opportunities for DATANG INTL and Postal Savings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DATANG and Postal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank and DATANG INTL 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 DATANG INTL POW are associated (or correlated) with Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of DATANG INTL i.e., DATANG INTL and Postal Savings go up and down completely randomly.
Pair Corralation between DATANG INTL and Postal Savings
Assuming the 90 days trading horizon DATANG INTL POW is expected to under-perform the Postal Savings. But the stock apears to be less risky and, when comparing its historical volatility, DATANG INTL POW is 2.76 times less risky than Postal Savings. The stock trades about -0.01 of its potential returns per unit of risk. The Postal Savings Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Postal Savings Bank on September 3, 2024 and sell it today you would earn a total of 29.00 from holding Postal Savings Bank or generate 120.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATANG INTL POW vs. Postal Savings Bank
Performance |
| Timeline |
| DATANG INTL POW |
| Postal Savings Bank |
DATANG INTL and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATANG INTL and Postal Savings
The main advantage of trading using opposite DATANG INTL and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATANG INTL position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.| DATANG INTL vs. TOTAL GABON | DATANG INTL vs. Walgreens Boots Alliance | DATANG INTL vs. Peak Resources Limited |
| Postal Savings vs. Boyd Gaming | Postal Savings vs. Games Workshop Group | Postal Savings vs. Clean Energy Fuels | Postal Savings vs. International Game Technology |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |