Correlation Between Gentex and Deutsche Post

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

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

Diversification Opportunities for Gentex and Deutsche Post

-0.72

Correlation Coefficient

Gentex  Deutsche Post

Pay attention - limited upside

The 3 months correlation between Gentex and Deutsche is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG and Gentex 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 Gentex are associated (or correlated) with Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of Gentex i.e., Gentex and Deutsche Post go up and down completely randomly.

Pair Corralation between Gentex and Deutsche Post

Assuming the 90 days horizon Gentex is expected to generate 0.85 times more return on investment than Deutsche Post. However, Gentex is 1.18 times less risky than Deutsche Post. It trades about -0.04 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.17 per unit of risk. If you would invest  2,840  in Gentex on September 23, 2024 and sell it today you would lose (40.00) from holding Gentex or give up 1.41% of portfolio value over 90 days.

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

Gentex  vs.  Deutsche Post AG

Gentex

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gentex and Deutsche Post

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

The idea behind Gentex and Deutsche Post AG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.