Correlation Between Warehouses and Inpost SA

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

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

Diversification Opportunities for Warehouses and Inpost SA

0.25

Correlation Coefficient

Warehouses  Inpost SA

Modest diversification

The 3 months correlation between Warehouses and Inpost is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses de Pauw and Inpost SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpost SA and Warehouses 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 Warehouses de Pauw 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 Warehouses i.e., Warehouses and Inpost SA go up and down completely randomly.

Pair Corralation between Warehouses and Inpost SA

Assuming the 90 days trading horizon Warehouses is expected to generate 2.13 times less return on investment than Inpost SA. But when comparing it to its historical volatility, Warehouses de Pauw is 1.09 times less risky than Inpost SA. It trades about 0.02 of its potential returns per unit of risk. Inpost SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Warehouses de Pauw  vs.  Inpost SA

Warehouses de Pauw

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Warehouses de Pauw are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Warehouses is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail 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 Warehouses and Inpost SA

The main advantage of trading using opposite Warehouses and Inpost SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warehouses 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 Warehouses de Pauw 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.