Correlation Between Postal Savings and PSB Holdings
Can any of the company-specific risk be diversified away by investing in both Postal Savings and PSB 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 Postal Savings and PSB Holdings 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 PSB Holdings, you can compare the effects of market volatilities on Postal Savings and PSB 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 Postal Savings with a short position of PSB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and PSB Holdings.
Diversification Opportunities for Postal Savings and PSB Holdings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Postal and PSB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings 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 PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Postal Savings i.e., Postal Savings and PSB Holdings go up and down completely randomly.
Pair Corralation between Postal Savings and PSB Holdings
Assuming the 90 days horizon Postal Savings Bank is expected to generate 2.89 times more return on investment than PSB Holdings. However, Postal Savings is 2.89 times more volatile than PSB Holdings. It trades about 0.06 of its potential returns per unit of risk. PSB Holdings is currently generating about 0.16 per unit of risk. If you would invest 867.00 in Postal Savings Bank on August 27, 2024 and sell it today you would earn a total of 288.00 from holding Postal Savings Bank or generate 33.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.43% |
| Values | Daily Returns |
Postal Savings Bank vs. PSB Holdings
Performance |
| Timeline |
| Postal Savings Bank |
| PSB Holdings |
Postal Savings and PSB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and PSB Holdings
The main advantage of trading using opposite Postal Savings and PSB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, PSB 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 PSB Holdings will offset losses from the drop in PSB Holdings' long position.The idea behind Postal Savings Bank and PSB Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PSB Holdings vs. Invesco High Income | PSB Holdings vs. Blackrock Muniholdings Ny | PSB Holdings vs. MFS Investment Grade | PSB Holdings vs. Federated Premier Municipal |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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