Correlation Between Deutsche Post and Third Point

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

By analyzing existing cross correlation between Deutsche Post AG and Third Point Investors, you can compare the effects of market volatilities on Deutsche Post and Third Point 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 Deutsche Post with a short position of Third Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and Third Point.

Diversification Opportunities for Deutsche Post and Third Point

0.7

Correlation Coefficient

Deutsche Post  Third Point

Poor diversification

The 3 months correlation between Deutsche and Third is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and Third Point Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Point Investors and Deutsche 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 Deutsche Post AG are associated (or correlated) with Third Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Point Investors has no effect on the direction of Deutsche Post i.e., Deutsche Post and Third Point go up and down completely randomly.

Pair Corralation between Deutsche Post and Third Point

Assuming the 90 days trading horizon Deutsche Post AG is expected to generate 1.55 times more return on investment than Third Point. However, Deutsche Post is 1.55 times more volatile than Third Point Investors. It trades about 0.15 of its potential returns per unit of risk. Third Point Investors is currently generating about 0.08 per unit of risk. If you would invest  3,398  in Deutsche Post AG on April 22, 2025 and sell it today you would earn a total of  515.00  from holding Deutsche Post AG or generate 15.16% return on investment over 90 days.

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

Deutsche Post AG  vs.  Third Point Investors

Deutsche Post AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Post AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Deutsche Post unveiled solid returns over the last few months and may actually be approaching a breakup point.

Third Point Investors

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Third Point Investors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Third Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Deutsche Post and Third Point

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

The idea behind Deutsche Post AG and Third Point Investors 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.