Correlation Between Postmedia Network and Genesis Land

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

By analyzing existing cross correlation between Postmedia Network Canada and Genesis Land Development, you can compare the effects of market volatilities on Postmedia Network and Genesis Land 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 Postmedia Network with a short position of Genesis Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Genesis Land.

Diversification Opportunities for Postmedia Network and Genesis Land

0.26

Correlation Coefficient

Postmedia Network  Genesis Land

Modest diversification

The 3 months correlation between Postmedia and Genesis is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Genesis Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Land Development and Postmedia Network 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 Postmedia Network Canada are associated (or correlated) with Genesis Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Land Development has no effect on the direction of Postmedia Network i.e., Postmedia Network and Genesis Land go up and down completely randomly.

Pair Corralation between Postmedia Network and Genesis Land

Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 1.01 times more return on investment than Genesis Land. However, Postmedia Network is 1.01 times more volatile than Genesis Land Development. It trades about -0.01 of its potential returns per unit of risk. Genesis Land Development is currently generating about -0.05 per unit of risk. If you would invest  134.00  in Postmedia Network Canada on September 14, 2024 and sell it today you would lose (4.00) from holding Postmedia Network Canada or give up 2.99% of portfolio value over 90 days.

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

Postmedia Network Canada  vs.  Genesis Land Development

Postmedia Network Canada

Risk-Adjusted Performance

0 of 100

Very Weak

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

Genesis Land Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Land Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Postmedia Network and Genesis Land

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

The idea behind Postmedia Network Canada and Genesis Land Development 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.