Correlation Between BANK HANDLOWY and Postal Savings

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

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

Diversification Opportunities for BANK HANDLOWY and Postal Savings

0.7

Correlation Coefficient

BANK HANDLOWY  Postal Savings

Poor diversification

The 3 months correlation between BANK and Postal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY i.e., BANK HANDLOWY and Postal Savings go up and down completely randomly.

Pair Corralation between BANK HANDLOWY and Postal Savings

Assuming the 90 days trading horizon BANK HANDLOWY is expected to generate 0.54 times more return on investment than Postal Savings. However, BANK HANDLOWY is 1.85 times less risky than Postal Savings. It trades about 0.53 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.09 per unit of risk. If you would invest  2,070  in BANK HANDLOWY on December 28, 2024 and sell it today you would earn a total of  760.00  from holding BANK HANDLOWY or generate 36.71% return on investment over 90 days.

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

BANK HANDLOWY  vs.  Postal Savings Bank

BANK HANDLOWY

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BANK HANDLOWY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Postal Savings Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Postal Savings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BANK HANDLOWY and Postal Savings

The main advantage of trading using opposite BANK HANDLOWY and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY 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 BANK HANDLOWY 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..