Correlation Between OCI NV and PostNL NV

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

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

Diversification Opportunities for OCI NV and PostNL NV

-0.04

Correlation Coefficient

OCI NV  PostNL NV

Good diversification

The 3 months correlation between OCI and PostNL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding OCI NV and PostNL NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostNL NV and OCI NV 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 OCI NV are associated (or correlated) with PostNL NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostNL NV has no effect on the direction of OCI NV i.e., OCI NV and PostNL NV go up and down completely randomly.

Pair Corralation between OCI NV and PostNL NV

Assuming the 90 days trading horizon OCI NV is expected to generate 0.63 times more return on investment than PostNL NV. However, OCI NV is 1.59 times less risky than PostNL NV. It trades about 0.0 of its potential returns per unit of risk. PostNL NV is currently generating about -0.03 per unit of risk. If you would invest  1,070  in OCI NV on December 30, 2024 and sell it today you would lose (6.00) from holding OCI NV or give up 0.56% of portfolio value over 90 days.

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

OCI NV  vs.  PostNL NV

OCI NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days OCI NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, OCI NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PostNL NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days PostNL NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, PostNL NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with OCI NV and PostNL NV

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

The idea behind OCI NV and PostNL NV 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.