Correlation Between Post and Innovative Technology

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

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

Diversification Opportunities for Post and Innovative Technology

-0.67

Correlation Coefficient

Post  Innovative Technology

Excellent diversification

The 3 months correlation between Post and Innovative is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology and Post 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 and Telecommunications are associated (or correlated) with Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of Post i.e., Post and Innovative Technology go up and down completely randomly.

Pair Corralation between Post and Innovative Technology

Assuming the 90 days trading horizon Post and Telecommunications is expected to under-perform the Innovative Technology. In addition to that, Post is 1.27 times more volatile than Innovative Technology Development. It trades about -0.07 of its total potential returns per unit of risk. Innovative Technology Development is currently generating about -0.08 per unit of volatility. If you would invest  1,370,000  in Innovative Technology Development on September 14, 2024 and sell it today you would lose (45,000) from holding Innovative Technology Development or give up 3.28% of portfolio value over 90 days.

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

Post and Telecommunications  vs.  Innovative Technology Developm

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.

Innovative Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Technology Development are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Innovative Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Post and Innovative Technology

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

The idea behind Post and Telecommunications and Innovative Technology Development 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.