Correlation Between EVS Broadcast and Deutsche Post

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

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

Diversification Opportunities for EVS Broadcast and Deutsche Post

0.88

Correlation Coefficient

EVS Broadcast  Deutsche Post

Very poor diversification

The 3 months correlation between EVS and Deutsche is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment 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 EVS Broadcast 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 EVS Broadcast Equipment 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 EVS Broadcast i.e., EVS Broadcast and Deutsche Post go up and down completely randomly.

Pair Corralation between EVS Broadcast and Deutsche Post

Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 0.75 times more return on investment than Deutsche Post. However, EVS Broadcast Equipment is 1.34 times less risky than Deutsche Post. It trades about 0.22 of its potential returns per unit of risk. Deutsche Post AG is currently generating about 0.16 per unit of risk. If you would invest  3,080  in EVS Broadcast Equipment on December 23, 2024 and sell it today you would earn a total of  740.00  from holding EVS Broadcast Equipment or generate 24.03% return on investment over 90 days.

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

EVS Broadcast Equipment  vs.  Deutsche Post AG

EVS Broadcast Equipment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast unveiled solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Post AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Post AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Deutsche Post unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EVS Broadcast and Deutsche Post

The main advantage of trading using opposite EVS Broadcast and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVS Broadcast 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 EVS Broadcast Equipment 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.

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.