Correlation Between Postal Savings and Wuhan Hvsen

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

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

Diversification Opportunities for Postal Savings and Wuhan Hvsen

0.17

Correlation Coefficient

Postal Savings  Wuhan Hvsen

Average diversification

The 3 months correlation between Postal and Wuhan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Wuhan Hvsen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan Hvsen Biotechnology and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Wuhan Hvsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan Hvsen Biotechnology has no effect on the direction of Postal Savings i.e., Postal Savings and Wuhan Hvsen go up and down completely randomly.

Pair Corralation between Postal Savings and Wuhan Hvsen

Assuming the 90 days trading horizon Postal Savings Bank is expected to under-perform the Wuhan Hvsen. But the stock apears to be less risky and, when comparing its historical volatility, Postal Savings Bank is 2.13 times less risky than Wuhan Hvsen. The stock trades about -0.03 of its potential returns per unit of risk. The Wuhan Hvsen Biotechnology is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  917.00  in Wuhan Hvsen Biotechnology on December 11, 2024 and sell it today you would earn a total of  267.00  from holding Wuhan Hvsen Biotechnology or generate 29.12% return on investment over 90 days.

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

Postal Savings Bank  vs.  Wuhan Hvsen Biotechnology

Postal Savings Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Postal Savings Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Postal Savings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wuhan Hvsen Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wuhan Hvsen Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wuhan Hvsen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Postal Savings and Wuhan Hvsen

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

The idea behind Postal Savings Bank and Wuhan Hvsen Biotechnology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.