Correlation Between Deutsche Post and Adriatic Metals

Can any of the company-specific risk be diversified away by investing in both Deutsche Post and Adriatic Metals 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 Adriatic Metals 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 Adriatic Metals, you can compare the effects of market volatilities on Deutsche Post and Adriatic Metals 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 Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and Adriatic Metals.

Diversification Opportunities for Deutsche Post and Adriatic Metals

-0.63

Correlation Coefficient

Deutsche Post  Adriatic Metals

Excellent diversification

The 3 months correlation between Deutsche and Adriatic is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and Adriatic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals 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 Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals has no effect on the direction of Deutsche Post i.e., Deutsche Post and Adriatic Metals go up and down completely randomly.

Pair Corralation between Deutsche Post and Adriatic Metals

Assuming the 90 days trading horizon Deutsche Post AG is expected to under-perform the Adriatic Metals. But the stock apears to be less risky and, when comparing its historical volatility, Deutsche Post AG is 2.07 times less risky than Adriatic Metals. The stock trades about -0.1 of its potential returns per unit of risk. The Adriatic Metals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  14,440  in Adriatic Metals on September 5, 2024 and sell it today you would earn a total of  6,260  from holding Adriatic Metals or generate 43.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Deutsche Post AG  vs.  Adriatic Metals

Deutsche Post AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Adriatic Metals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Adriatic Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Post and Adriatic Metals

The main advantage of trading using opposite Deutsche Post and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Post position performs unexpectedly, Adriatic Metals 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.

The idea behind Deutsche Post AG and Adriatic Metals 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.

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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 Stocks Directory module to find actively traded stocks across global markets.