Correlation Between Postal Savings and Zhejiang Orient

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

Diversification Opportunities for Postal Savings and Zhejiang Orient

-0.48

Correlation Coefficient

Postal Savings  Zhejiang Orient

Very good diversification

The 3 months correlation between Postal and Zhejiang is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Zhejiang Orient Gene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Orient Gene 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 Zhejiang Orient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Orient Gene has no effect on the direction of Postal Savings i.e., Postal Savings and Zhejiang Orient go up and down completely randomly.

Pair Corralation between Postal Savings and Zhejiang Orient

Assuming the 90 days trading horizon Postal Savings Bank is expected to generate 0.48 times more return on investment than Zhejiang Orient. However, Postal Savings Bank is 2.09 times less risky than Zhejiang Orient. It trades about 0.07 of its potential returns per unit of risk. Zhejiang Orient Gene is currently generating about -0.01 per unit of risk. If you would invest  438.00  in Postal Savings Bank on October 6, 2024 and sell it today you would earn a total of  111.00  from holding Postal Savings Bank or generate 25.34% return on investment over 90 days.

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

Postal Savings Bank  vs.  Zhejiang Orient Gene

Postal Savings Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Zhejiang Orient Gene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Orient Gene 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 Zhejiang Orient

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

The idea behind Postal Savings Bank and Zhejiang Orient Gene 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.