Correlation Between Postal Savings and Cheniere Energy

Can any of the company-specific risk be diversified away by investing in both Postal Savings and Cheniere 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 Postal Savings and Cheniere Energy 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 Cheniere Energy, you can compare the effects of market volatilities on Postal Savings and Cheniere 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 Postal Savings with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Cheniere Energy.

Diversification Opportunities for Postal Savings and Cheniere Energy

0.0

Correlation Coefficient

Postal Savings  Cheniere Energy

Pay attention - limited upside

The 3 months correlation between Postal and Cheniere is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy has no effect on the direction of Postal Savings i.e., Postal Savings and Cheniere Energy go up and down completely randomly.

Pair Corralation between Postal Savings and Cheniere Energy

Assuming the 90 days horizon Postal Savings is expected to generate 2.5 times less return on investment than Cheniere Energy. In addition to that, Postal Savings is 1.27 times more volatile than Cheniere Energy. It trades about 0.06 of its total potential returns per unit of risk. Cheniere Energy is currently generating about 0.2 per unit of volatility. If you would invest  16,017  in Cheniere Energy on September 25, 2024 and sell it today you would earn a total of  3,943  from holding Cheniere Energy or generate 24.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Postal Savings Bank  vs.  Cheniere Energy

Postal Savings Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Postal Savings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cheniere Energy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Postal Savings and Cheniere Energy

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

The idea behind Postal Savings Bank and Cheniere Energy 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.