Correlation Between Postmedia Network and Pro Real

Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Pro Real 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 Pro Real 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 Pro Real Estate, you can compare the effects of market volatilities on Postmedia Network and Pro Real 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 Pro Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Pro Real.

Diversification Opportunities for Postmedia Network and Pro Real

0.73

Correlation Coefficient

Postmedia Network  Pro Real

Poor diversification

The 3 months correlation between Postmedia and Pro is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Pro Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Real Estate 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 Pro Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Real Estate has no effect on the direction of Postmedia Network i.e., Postmedia Network and Pro Real go up and down completely randomly.

Pair Corralation between Postmedia Network and Pro Real

Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 3.08 times more return on investment than Pro Real. However, Postmedia Network is 3.08 times more volatile than Pro Real Estate. It trades about 0.0 of its potential returns per unit of risk. Pro Real Estate is currently generating about 0.01 per unit of risk. If you would invest  162.00  in Postmedia Network Canada on September 28, 2024 and sell it today you would lose (45.00) from holding Postmedia Network Canada or give up 27.78% of portfolio value over 90 days.

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

Postmedia Network Canada  vs.  Pro Real Estate

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pro Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pro Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Postmedia Network and Pro Real

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

The idea behind Postmedia Network Canada and Pro Real Estate 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.