Correlation Between Hub and Deutsche Post

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

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

Diversification Opportunities for Hub and Deutsche Post

-0.45

Correlation Coefficient

Hub  Deutsche Post

Very good diversification

The 3 months correlation between Hub and Deutsche is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group 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 Hub 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 Hub Group 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 Hub i.e., Hub and Deutsche Post go up and down completely randomly.

Pair Corralation between Hub and Deutsche Post

Given the investment horizon of 90 days Hub Group is expected to under-perform the Deutsche Post. But the stock apears to be less risky and, when comparing its historical volatility, Hub Group is 1.05 times less risky than Deutsche Post. The stock trades about -0.38 of its potential returns per unit of risk. The Deutsche Post AG is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  3,631  in Deutsche Post AG on October 14, 2024 and sell it today you would lose (165.00) from holding Deutsche Post AG or give up 4.54% of portfolio value over 90 days.

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

Hub Group  vs.  Deutsche Post AG

Hub Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hub Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Hub is not utilizing all of its potentials. The latest 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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hub and Deutsche Post

The main advantage of trading using opposite Hub and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub 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 Hub Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.