Correlation Between Industrial Urban and Post

Can any of the company-specific risk be diversified away by investing in both Industrial Urban and Post 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 Industrial Urban and Post into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industrial Urban Development and Post and Telecommunications, you can compare the effects of market volatilities on Industrial Urban and Post 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 Industrial Urban with a short position of Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Urban and Post.

Diversification Opportunities for Industrial Urban and Post

0.83

Correlation Coefficient

Industrial Urban  Post

Very poor diversification

The 3 months correlation between Industrial and Post is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Urban Development and Post and Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post and Telecommuni and Industrial Urban 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 Industrial Urban Development are associated (or correlated) with Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post and Telecommuni has no effect on the direction of Industrial Urban i.e., Industrial Urban and Post go up and down completely randomly.

Pair Corralation between Industrial Urban and Post

Assuming the 90 days trading horizon Industrial Urban Development is expected to under-perform the Post. In addition to that, Industrial Urban is 1.33 times more volatile than Post and Telecommunications. It trades about -0.16 of its total potential returns per unit of risk. Post and Telecommunications is currently generating about -0.06 per unit of volatility. If you would invest  501,000  in Post and Telecommunications on September 26, 2024 and sell it today you would lose (51,000) from holding Post and Telecommunications or give up 10.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Industrial Urban Development  vs.  Post and Telecommunications

Industrial Urban Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Urban Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Post and Telecommuni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Post and Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Industrial Urban and Post

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

The idea behind Industrial Urban Development and Post and Telecommunications 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.