Correlation Between Post Holdings and Associated British

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

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

Diversification Opportunities for Post Holdings and Associated British

-0.26

Correlation Coefficient

Post Holdings  Associated British

Very good diversification

The 3 months correlation between Post and Associated is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Post Holdings and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Post Holdings 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 Post Holdings are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Post Holdings i.e., Post Holdings and Associated British go up and down completely randomly.

Pair Corralation between Post Holdings and Associated British

Given the investment horizon of 90 days Post Holdings is expected to generate 1.07 times more return on investment than Associated British. However, Post Holdings is 1.07 times more volatile than Associated British Foods. It trades about 0.01 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.18 per unit of risk. If you would invest  11,459  in Post Holdings on September 22, 2024 and sell it today you would earn a total of  26.00  from holding Post Holdings or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Post Holdings  vs.  Associated British Foods

Post Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Post Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Post Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Associated British Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated British Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Post Holdings and Associated British

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

The idea behind Post Holdings and Associated British Foods 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.