Correlation Between PostNL NV and Inpost SA

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

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

Diversification Opportunities for PostNL NV and Inpost SA

0.73

Correlation Coefficient

PostNL NV  Inpost SA

Poor diversification

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

Pair Corralation between PostNL NV and Inpost SA

Assuming the 90 days trading horizon PostNL NV is expected to under-perform the Inpost SA. In addition to that, PostNL NV is 1.2 times more volatile than Inpost SA. It trades about -0.04 of its total potential returns per unit of risk. Inpost SA is currently generating about 0.04 per unit of volatility. If you would invest  1,606  in Inpost SA on December 4, 2024 and sell it today you would earn a total of  52.00  from holding Inpost SA or generate 3.24% return on investment over 90 days.

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

PostNL NV  vs.  Inpost SA

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.

Inpost SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inpost SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Inpost SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PostNL NV and Inpost SA

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

The idea behind PostNL NV and Inpost SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.