Correlation Between Deutsche Post and Lonking Holdings
Can any of the company-specific risk be diversified away by investing in both Deutsche Post and Lonking Holdings 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 Deutsche Post and Lonking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Post AG and Lonking Holdings Ltd, you can compare the effects of market volatilities on Deutsche Post and Lonking Holdings 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 Deutsche Post with a short position of Lonking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and Lonking Holdings.
Diversification Opportunities for Deutsche Post and Lonking Holdings
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and Lonking is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and Lonking Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonking Holdings and Deutsche Post 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 Deutsche Post AG are associated (or correlated) with Lonking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonking Holdings has no effect on the direction of Deutsche Post i.e., Deutsche Post and Lonking Holdings go up and down completely randomly.
Pair Corralation between Deutsche Post and Lonking Holdings
Assuming the 90 days horizon Deutsche Post AG is expected to generate 0.87 times more return on investment than Lonking Holdings. However, Deutsche Post AG is 1.14 times less risky than Lonking Holdings. It trades about -0.18 of its potential returns per unit of risk. Lonking Holdings Ltd is currently generating about -0.18 per unit of risk. If you would invest 4,044 in Deutsche Post AG on September 5, 2024 and sell it today you would lose (402.00) from holding Deutsche Post AG or give up 9.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Deutsche Post AG vs. Lonking Holdings Ltd
Performance |
| Timeline |
| Deutsche Post AG |
| Lonking Holdings |
Deutsche Post and Lonking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Post and Lonking Holdings
The main advantage of trading using opposite Deutsche Post and Lonking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Post position performs unexpectedly, Lonking Holdings 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 Lonking Holdings will offset losses from the drop in Lonking Holdings' long position.| Deutsche Post vs. Kuehne Nagel International | Deutsche Post vs. Kuehne Nagel International | Deutsche Post vs. DSV Panalpina AS | Deutsche Post vs. DSV Panalpina AS |
| Lonking Holdings vs. Volvo AB ADR | Lonking Holdings vs. Deere Company | Lonking Holdings vs. Deutsche Post AG | Lonking Holdings vs. VINCI SA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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