Correlation Between Inpost SA and Warehouses

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

By analyzing existing cross correlation between Inpost SA and Warehouses de Pauw, you can compare the effects of market volatilities on Inpost SA and Warehouses 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 Inpost SA with a short position of Warehouses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inpost SA and Warehouses.

Diversification Opportunities for Inpost SA and Warehouses

0.3

Correlation Coefficient

Inpost SA  Warehouses

Weak diversification

The 3 months correlation between Inpost and Warehouses is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Inpost SA and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw and Inpost SA 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 Inpost SA are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of Inpost SA i.e., Inpost SA and Warehouses go up and down completely randomly.

Pair Corralation between Inpost SA and Warehouses

Assuming the 90 days trading horizon Inpost SA is expected to under-perform the Warehouses. In addition to that, Inpost SA is 1.26 times more volatile than Warehouses de Pauw. It trades about -0.18 of its total potential returns per unit of risk. Warehouses de Pauw is currently generating about -0.18 per unit of volatility. If you would invest  2,040  in Warehouses de Pauw on September 19, 2024 and sell it today you would lose (114.00) from holding Warehouses de Pauw or give up 5.59% of portfolio value over 90 days.

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

Inpost SA  vs.  Warehouses de Pauw

Inpost SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpost SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Warehouses de Pauw

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses de Pauw has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Inpost SA and Warehouses

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

The idea behind Inpost SA and Warehouses de Pauw 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.