Correlation Between Postal Savings and A Zenith

Can any of the company-specific risk be diversified away by investing in both Postal Savings and A Zenith 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 A Zenith 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 A Zenith Home Furnishings, you can compare the effects of market volatilities on Postal Savings and A Zenith 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 A Zenith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and A Zenith.

Diversification Opportunities for Postal Savings and A Zenith

0.28

Correlation Coefficient

Postal Savings  A Zenith

Modest diversification

The 3 months correlation between Postal and 603389 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and A Zenith Home Furnishings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Zenith Home 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 A Zenith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Zenith Home has no effect on the direction of Postal Savings i.e., Postal Savings and A Zenith go up and down completely randomly.

Pair Corralation between Postal Savings and A Zenith

Assuming the 90 days trading horizon Postal Savings is expected to generate 1.58 times less return on investment than A Zenith. But when comparing it to its historical volatility, Postal Savings Bank is 3.63 times less risky than A Zenith. It trades about 0.04 of its potential returns per unit of risk. A Zenith Home Furnishings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  602.00  in A Zenith Home Furnishings on October 24, 2024 and sell it today you would lose (83.00) from holding A Zenith Home Furnishings or give up 13.79% of portfolio value over 90 days.

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

Postal Savings Bank  vs.  A Zenith Home Furnishings

Postal Savings Bank

Risk-Adjusted Performance

0 of 100

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.

A Zenith Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A Zenith Home Furnishings 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 somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Postal Savings and A Zenith

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

The idea behind Postal Savings Bank and A Zenith Home Furnishings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.