Correlation Between Addentax Group and Royal Mail

Can any of the company-specific risk be diversified away by investing in both Addentax Group and Royal Mail 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 Addentax Group and Royal Mail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Addentax Group Corp and Royal Mail Plc, you can compare the effects of market volatilities on Addentax Group and Royal Mail 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 Addentax Group with a short position of Royal Mail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addentax Group and Royal Mail.

Diversification Opportunities for Addentax Group and Royal Mail

0.2

Correlation Coefficient

Addentax Group  Royal Mail

Modest diversification

The 3 months correlation between Addentax and Royal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Addentax Group Corp and Royal Mail Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Mail Plc and Addentax Group 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 Addentax Group Corp are associated (or correlated) with Royal Mail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Mail Plc has no effect on the direction of Addentax Group i.e., Addentax Group and Royal Mail go up and down completely randomly.

Pair Corralation between Addentax Group and Royal Mail

If you would invest  51.00  in Addentax Group Corp on September 1, 2024 and sell it today you would earn a total of  5.00  from holding Addentax Group Corp or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Addentax Group Corp  vs.  Royal Mail Plc

Addentax Group Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Addentax Group Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Addentax Group reported solid returns over the last few months and may actually be approaching a breakup point.

Royal Mail Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Mail Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Royal Mail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Addentax Group and Royal Mail

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

The idea behind Addentax Group Corp and Royal Mail Plc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..