Correlation Between Deutsche Post and State Bank

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

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

Diversification Opportunities for Deutsche Post and State Bank

-0.61

Correlation Coefficient

Deutsche Post  State Bank

Excellent diversification

The 3 months correlation between Deutsche and State is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Deutsche 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 Deutsche Post AG are associated (or correlated) with State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Deutsche Post i.e., Deutsche Post and State Bank go up and down completely randomly.

Pair Corralation between Deutsche Post and State Bank

Assuming the 90 days trading horizon Deutsche Post is expected to generate 6.31 times less return on investment than State Bank. But when comparing it to its historical volatility, Deutsche Post AG is 1.23 times less risky than State Bank. It trades about 0.01 of its potential returns per unit of risk. State Bank of is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,105  in State Bank of on September 23, 2024 and sell it today you would earn a total of  2,565  from holding State Bank of or generate 36.1% return on investment over 90 days.

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

Deutsche Post AG  vs.  State Bank of

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.

State Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Deutsche Post and State Bank

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

The idea behind Deutsche Post AG and State Bank of 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.