Correlation Between SH Energy and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both SH Energy and POSCO Holdings 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 SH Energy and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and POSCO Holdings, you can compare the effects of market volatilities on SH Energy and POSCO Holdings 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 SH Energy with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and POSCO Holdings.
Diversification Opportunities for SH Energy and POSCO Holdings
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 002360 and POSCO is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and SH Energy 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 SH Energy Chemical are associated (or correlated) with POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of SH Energy i.e., SH Energy and POSCO Holdings go up and down completely randomly.
Pair Corralation between SH Energy and POSCO Holdings
Assuming the 90 days trading horizon SH Energy Chemical is expected to under-perform the POSCO Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SH Energy Chemical is 2.95 times less risky than POSCO Holdings. The stock trades about -0.32 of its potential returns per unit of risk. The POSCO Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 25,819,100 in POSCO Holdings on December 1, 2024 and sell it today you would earn a total of 1,430,900 from holding POSCO Holdings or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. POSCO Holdings
Performance |
| Timeline |
| SH Energy Chemical |
| POSCO Holdings |
SH Energy and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and POSCO Holdings
The main advantage of trading using opposite SH Energy and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| SH Energy vs. FNSTech Co | SH Energy vs. Digital Imaging Technology | SH Energy vs. Korea Plasma Technology | SH Energy vs. Hanyang Digitech Co |
| POSCO Holdings vs. Kyung In Synthetic Corp | POSCO Holdings vs. Daejung Chemicals Metals | POSCO Holdings vs. Miwon Chemical | POSCO Holdings vs. Eagon Industrial Co |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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