Correlation Between Deutsche Post and Crayon Group

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

By analyzing existing cross correlation between Deutsche Post AG and Crayon Group Holding, you can compare the effects of market volatilities on Deutsche Post and Crayon Group 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 Deutsche Post with a short position of Crayon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and Crayon Group.

Diversification Opportunities for Deutsche Post and Crayon Group

0.84

Correlation Coefficient

Deutsche Post  Crayon Group

Very poor diversification

The 3 months correlation between Deutsche and Crayon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and Deutsche Post 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 Deutsche Post AG are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Deutsche Post i.e., Deutsche Post and Crayon Group go up and down completely randomly.

Pair Corralation between Deutsche Post and Crayon Group

Assuming the 90 days horizon Deutsche Post is expected to generate 3.13 times less return on investment than Crayon Group. But when comparing it to its historical volatility, Deutsche Post AG is 1.46 times less risky than Crayon Group. It trades about 0.01 of its potential returns per unit of risk. Crayon Group Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  952.00  in Crayon Group Holding on September 26, 2024 and sell it today you would earn a total of  168.00  from holding Crayon Group Holding or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.97%
Values	Daily Returns

Deutsche Post AG  vs.  Crayon Group Holding

Deutsche Post AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Crayon Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Deutsche Post and Crayon Group

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

The idea behind Deutsche Post AG and Crayon Group Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.