Correlation Between RYANAIR HLDGS and Postal Savings

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

By analyzing existing cross correlation between RYANAIR HLDGS ADR and Postal Savings Bank, you can compare the effects of market volatilities on RYANAIR HLDGS and Postal Savings 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 RYANAIR HLDGS with a short position of Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RYANAIR HLDGS and Postal Savings.

Diversification Opportunities for RYANAIR HLDGS and Postal Savings

0.19

Correlation Coefficient

RYANAIR HLDGS  Postal Savings

Average diversification

The 3 months correlation between RYANAIR and Postal is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding RYANAIR HLDGS ADR and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank and RYANAIR HLDGS 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 RYANAIR HLDGS ADR are associated (or correlated) with Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of RYANAIR HLDGS i.e., RYANAIR HLDGS and Postal Savings go up and down completely randomly.

Pair Corralation between RYANAIR HLDGS and Postal Savings

Assuming the 90 days trading horizon RYANAIR HLDGS is expected to generate 18.01 times less return on investment than Postal Savings. But when comparing it to its historical volatility, RYANAIR HLDGS ADR is 2.6 times less risky than Postal Savings. It trades about 0.02 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Postal Savings Bank on December 21, 2024 and sell it today you would earn a total of  21.00  from holding Postal Savings Bank or generate 52.5% return on investment over 90 days.

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

RYANAIR HLDGS ADR  vs.  Postal Savings Bank

RYANAIR HLDGS ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RYANAIR HLDGS ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RYANAIR HLDGS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Postal Savings Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Postal Savings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RYANAIR HLDGS and Postal Savings

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

The idea behind RYANAIR HLDGS ADR and Postal Savings Bank 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.