Correlation Between Torm PLC and Postal Realty

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

By analyzing existing cross correlation between Torm PLC Class and Postal Realty Trust, you can compare the effects of market volatilities on Torm PLC and Postal Realty 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 Torm PLC with a short position of Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torm PLC and Postal Realty.

Diversification Opportunities for Torm PLC and Postal Realty

0.0

Correlation Coefficient

Torm PLC  Postal Realty

Pay attention - limited upside

The 3 months correlation between Torm and Postal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Torm PLC Class and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust and Torm PLC 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 Torm PLC Class are associated (or correlated) with Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of Torm PLC i.e., Torm PLC and Postal Realty go up and down completely randomly.

Pair Corralation between Torm PLC and Postal Realty

Given the investment horizon of 90 days Torm PLC Class is expected to under-perform the Postal Realty. In addition to that, Torm PLC is 1.28 times more volatile than Postal Realty Trust. It trades about -0.07 of its total potential returns per unit of risk. Postal Realty Trust is currently generating about 0.01 per unit of volatility. If you would invest  1,390  in Postal Realty Trust on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Postal Realty Trust or generate 0.22% return on investment over 90 days.

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

Torm PLC Class  vs.  Postal Realty Trust

Torm PLC Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Torm PLC Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Postal Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Postal Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Postal Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Torm PLC and Postal Realty

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

The idea behind Torm PLC Class and Postal Realty Trust 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.