Correlation Between Postal Savings and Hundsun Technologies

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

Diversification Opportunities for Postal Savings and Hundsun Technologies

0.73

Correlation Coefficient

Postal Savings  Hundsun Technologies

Poor diversification

The 3 months correlation between Postal and Hundsun is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Hundsun Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hundsun Technologies 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 Hundsun Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hundsun Technologies has no effect on the direction of Postal Savings i.e., Postal Savings and Hundsun Technologies go up and down completely randomly.

Pair Corralation between Postal Savings and Hundsun Technologies

Assuming the 90 days trading horizon Postal Savings is expected to generate 3.89 times less return on investment than Hundsun Technologies. But when comparing it to its historical volatility, Postal Savings Bank is 2.34 times less risky than Hundsun Technologies. It trades about 0.16 of its potential returns per unit of risk. Hundsun Technologies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,633  in Hundsun Technologies on September 5, 2024 and sell it today you would earn a total of  1,484  from holding Hundsun Technologies or generate 90.88% return on investment over 90 days.

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

Postal Savings Bank  vs.  Hundsun Technologies

Postal Savings Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Postal Savings sustained solid returns over the last few months and may actually be approaching a breakup point.

Hundsun Technologies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hundsun Technologies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hundsun Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Postal Savings and Hundsun Technologies

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

The idea behind Postal Savings Bank and Hundsun Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.