Correlation Between Foreign Trade and POST TELECOMMU

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

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

Diversification Opportunities for Foreign Trade and POST TELECOMMU

0.44

Correlation Coefficient

Foreign Trade  POST TELECOMMU

Very weak diversification

The 3 months correlation between Foreign and POST is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Development and POST TELECOMMU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POST TELECOMMU and Foreign Trade 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 Foreign Trade Development are associated (or correlated) with POST TELECOMMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POST TELECOMMU has no effect on the direction of Foreign Trade i.e., Foreign Trade and POST TELECOMMU go up and down completely randomly.

Pair Corralation between Foreign Trade and POST TELECOMMU

Assuming the 90 days trading horizon Foreign Trade is expected to generate 1.07 times less return on investment than POST TELECOMMU. In addition to that, Foreign Trade is 1.63 times more volatile than POST TELECOMMU. It trades about 0.12 of its total potential returns per unit of risk. POST TELECOMMU is currently generating about 0.21 per unit of volatility. If you would invest  3,210,000  in POST TELECOMMU on October 9, 2024 and sell it today you would earn a total of  390,000  from holding POST TELECOMMU or generate 12.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

Foreign Trade Development  vs.  POST TELECOMMU

Foreign Trade Development

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Foreign Trade is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

POST TELECOMMU

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POST TELECOMMU are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, POST TELECOMMU displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foreign Trade and POST TELECOMMU

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

The idea behind Foreign Trade Development and POST TELECOMMU 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.