Correlation Between Post and Century Synthetic

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

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

Diversification Opportunities for Post and Century Synthetic

0.56

Correlation Coefficient

Post  Century Synthetic

Very weak diversification

The 3 months correlation between Post and Century is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications and Century Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Synthetic Fiber and Post 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 Post and Telecommunications are associated (or correlated) with Century Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Synthetic Fiber has no effect on the direction of Post i.e., Post and Century Synthetic go up and down completely randomly.

Pair Corralation between Post and Century Synthetic

Assuming the 90 days trading horizon Post and Telecommunications is expected to generate 1.01 times more return on investment than Century Synthetic. However, Post is 1.01 times more volatile than Century Synthetic Fiber. It trades about -0.05 of its potential returns per unit of risk. Century Synthetic Fiber is currently generating about -0.05 per unit of risk. If you would invest  581,000  in Post and Telecommunications on October 9, 2024 and sell it today you would lose (128,000) from holding Post and Telecommunications or give up 22.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.46%
Values	Daily Returns

Post and Telecommunications  vs.  Century Synthetic Fiber

Post and Telecommuni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Post and Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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.

Century Synthetic Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Synthetic Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Century Synthetic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Post and Century Synthetic

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

The idea behind Post and Telecommunications and Century Synthetic Fiber 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.