Correlation Between Bpost NV and PostNL NV

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

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

Diversification Opportunities for Bpost NV and PostNL NV

0.5

Correlation Coefficient

Bpost NV  PostNL NV

Very weak diversification

The 3 months correlation between Bpost and PostNL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bpost NV and PostNL NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostNL NV and Bpost NV 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 Bpost NV are associated (or correlated) with PostNL NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostNL NV has no effect on the direction of Bpost NV i.e., Bpost NV and PostNL NV go up and down completely randomly.

Pair Corralation between Bpost NV and PostNL NV

Assuming the 90 days trading horizon Bpost NV is expected to under-perform the PostNL NV. In addition to that, Bpost NV is 2.1 times more volatile than PostNL NV. It trades about -0.08 of its total potential returns per unit of risk. PostNL NV is currently generating about -0.03 per unit of volatility. If you would invest  104.00  in PostNL NV on December 30, 2024 and sell it today you would lose (5.00) from holding PostNL NV or give up 4.81% of portfolio value over 90 days.

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

Bpost NV  vs.  PostNL NV

Bpost NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bpost NV 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PostNL NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days PostNL NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, PostNL NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bpost NV and PostNL NV

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

The idea behind Bpost NV and PostNL NV 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.