Correlation Between VINCI SA and Deutsche Post

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

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

Diversification Opportunities for VINCI SA and Deutsche Post

0.65

Correlation Coefficient

VINCI SA  Deutsche Post

Poor diversification

The 3 months correlation between VINCI and Deutsche is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding VINCI SA 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 VINCI 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 VINCI SA 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 VINCI SA i.e., VINCI SA and Deutsche Post go up and down completely randomly.

Pair Corralation between VINCI SA and Deutsche Post

Assuming the 90 days horizon VINCI SA is expected to generate 1.11 times more return on investment than Deutsche Post. However, VINCI SA is 1.11 times more volatile than Deutsche Post AG. It trades about -0.02 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  10,585  in VINCI SA on September 5, 2024 and sell it today you would lose (482.00) from holding VINCI SA or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

VINCI SA  vs.  Deutsche Post AG

VINCI SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VINCI SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VINCI SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with VINCI SA and Deutsche Post

The main advantage of trading using opposite VINCI SA and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VINCI SA 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 VINCI SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.