Correlation Between Kuehne Nagel and Royal Mail

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

By analyzing existing cross correlation between Kuehne Nagel International and Royal Mail PLC, you can compare the effects of market volatilities on Kuehne Nagel and Royal Mail 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 Kuehne Nagel with a short position of Royal Mail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuehne Nagel and Royal Mail.

Diversification Opportunities for Kuehne Nagel and Royal Mail

0.39

Correlation Coefficient

Kuehne Nagel  Royal Mail

Weak diversification

The 3 months correlation between Kuehne and Royal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kuehne Nagel International and Royal Mail PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Mail PLC and Kuehne Nagel 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 Kuehne Nagel International are associated (or correlated) with Royal Mail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Mail PLC has no effect on the direction of Kuehne Nagel i.e., Kuehne Nagel and Royal Mail go up and down completely randomly.

Pair Corralation between Kuehne Nagel and Royal Mail

Assuming the 90 days horizon Kuehne Nagel International is expected to under-perform the Royal Mail. In addition to that, Kuehne Nagel is 2.14 times more volatile than Royal Mail PLC. It trades about -0.19 of its total potential returns per unit of risk. Royal Mail PLC is currently generating about 0.5 per unit of volatility. If you would invest  864.00  in Royal Mail PLC on September 22, 2024 and sell it today you would earn a total of  51.00  from holding Royal Mail PLC or generate 5.9% return on investment over 90 days.

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

Kuehne Nagel International  vs.  Royal Mail PLC

Kuehne Nagel Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuehne Nagel International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Royal Mail PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Mail PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Royal Mail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kuehne Nagel and Royal Mail

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

The idea behind Kuehne Nagel International and Royal Mail PLC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.