Correlation Between Deutsche Post and Pharos Energy
Can any of the company-specific risk be diversified away by investing in both Deutsche Post and Pharos Energy 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 Pharos Energy 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 Pharos Energy plc, you can compare the effects of market volatilities on Deutsche Post and Pharos Energy 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 Pharos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and Pharos Energy.
Diversification Opportunities for Deutsche Post and Pharos Energy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Pharos is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and Pharos Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharos Energy plc 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 Pharos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharos Energy plc has no effect on the direction of Deutsche Post i.e., Deutsche Post and Pharos Energy go up and down completely randomly.
Pair Corralation between Deutsche Post and Pharos Energy
Assuming the 90 days horizon Deutsche Post AG is expected to generate 0.62 times more return on investment than Pharos Energy. However, Deutsche Post AG is 1.62 times less risky than Pharos Energy. It trades about -0.19 of its potential returns per unit of risk. Pharos Energy plc is currently generating about -0.22 per unit of risk. If you would invest 4,060 in Deutsche Post AG on September 1, 2024 and sell it today you would lose (426.00) from holding Deutsche Post AG or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Post AG vs. Pharos Energy plc
Performance |
| Timeline |
| Deutsche Post AG |
| Pharos Energy plc |
Deutsche Post and Pharos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Post and Pharos Energy
The main advantage of trading using opposite Deutsche Post and Pharos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Post position performs unexpectedly, Pharos Energy 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 Pharos Energy will offset losses from the drop in Pharos Energy's 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 |
| Pharos Energy vs. San Leon Energy | Pharos Energy vs. Enwell Energy plc | Pharos Energy vs. Dno ASA | Pharos Energy vs. PetroShale |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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