Correlation Between European Metals and Deutsche Post

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

By analyzing existing cross correlation between European Metals Holdings and Deutsche Post AG, you can compare the effects of market volatilities on European Metals and Deutsche 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 European Metals with a short position of Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Deutsche Post.

Diversification Opportunities for European Metals and Deutsche Post

0.46

Correlation Coefficient

European Metals  Deutsche Post

Very weak diversification

The 3 months correlation between European and Deutsche is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG and European Metals 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 European Metals Holdings are associated (or correlated) with Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of European Metals i.e., European Metals and Deutsche Post go up and down completely randomly.

Pair Corralation between European Metals and Deutsche Post

Assuming the 90 days trading horizon European Metals Holdings is expected to generate 2.25 times more return on investment than Deutsche Post. However, European Metals is 2.25 times more volatile than Deutsche Post AG. It trades about -0.03 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.13 per unit of risk. If you would invest  770.00  in European Metals Holdings on September 18, 2024 and sell it today you would lose (70.00) from holding European Metals Holdings or give up 9.09% of portfolio value over 90 days.

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

European Metals Holdings  vs.  Deutsche Post AG

European Metals Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Metals Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, European Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with European Metals and Deutsche Post

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

The idea behind European Metals Holdings and Deutsche Post AG 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 Commodity Directory module to find actively traded commodities issued by global exchanges.