Correlation Between Tibet Huayu and Postal Savings

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

By analyzing existing cross correlation between Tibet Huayu Mining and Postal Savings Bank, you can compare the effects of market volatilities on Tibet Huayu and Postal Savings 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 Tibet Huayu with a short position of Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tibet Huayu and Postal Savings.

Diversification Opportunities for Tibet Huayu and Postal Savings

0.53

Correlation Coefficient

Tibet Huayu  Postal Savings

Very weak diversification

The 3 months correlation between Tibet and Postal is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tibet Huayu Mining and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank and Tibet Huayu 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 Tibet Huayu Mining are associated (or correlated) with Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Tibet Huayu i.e., Tibet Huayu and Postal Savings go up and down completely randomly.

Pair Corralation between Tibet Huayu and Postal Savings

Assuming the 90 days trading horizon Tibet Huayu is expected to generate 1.44 times less return on investment than Postal Savings. In addition to that, Tibet Huayu is 2.13 times more volatile than Postal Savings Bank. It trades about 0.03 of its total potential returns per unit of risk. Postal Savings Bank is currently generating about 0.09 per unit of volatility. If you would invest  530.00  in Postal Savings Bank on September 22, 2024 and sell it today you would earn a total of  12.00  from holding Postal Savings Bank or generate 2.26% return on investment over 90 days.

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

Tibet Huayu Mining  vs.  Postal Savings Bank

Tibet Huayu Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tibet Huayu Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tibet Huayu sustained solid returns over the last few months and may actually be approaching a breakup point.

Postal Savings Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Postal Savings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tibet Huayu and Postal Savings

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

The idea behind Tibet Huayu Mining and Postal Savings Bank 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.