Correlation Between ForFarmers and PostNL NV

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

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

Diversification Opportunities for ForFarmers and PostNL NV

0.03

Correlation Coefficient

ForFarmers  PostNL NV

Significant diversification

The 3 months correlation between ForFarmers and PostNL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and PostNL NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostNL NV and ForFarmers 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 ForFarmers NV are associated (or correlated) with PostNL NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostNL NV has no effect on the direction of ForFarmers i.e., ForFarmers and PostNL NV go up and down completely randomly.

Pair Corralation between ForFarmers and PostNL NV

Assuming the 90 days trading horizon ForFarmers is expected to generate 1.2 times less return on investment than PostNL NV. But when comparing it to its historical volatility, ForFarmers NV is 1.1 times less risky than PostNL NV. It trades about 0.1 of its potential returns per unit of risk. PostNL NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  93.00  in PostNL NV on July 9, 2025 and sell it today you would earn a total of  15.00  from holding PostNL NV or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

ForFarmers NV  vs.  PostNL NV

ForFarmers NV

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ForFarmers NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ForFarmers sustained solid returns over the last few months and may actually be approaching a breakup point.

PostNL NV

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in PostNL NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, PostNL NV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ForFarmers and PostNL NV

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

The idea behind ForFarmers NV and PostNL NV 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.