Correlation Between Posco Chemical and Samlip General
Can any of the company-specific risk be diversified away by investing in both Posco Chemical and Samlip General 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 Posco Chemical and Samlip General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco Chemical Co and Samlip General Foods, you can compare the effects of market volatilities on Posco Chemical and Samlip General 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 Posco Chemical with a short position of Samlip General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco Chemical and Samlip General.
Diversification Opportunities for Posco Chemical and Samlip General
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Posco and Samlip is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Posco Chemical Co and Samlip General Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samlip General Foods and Posco Chemical 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 Posco Chemical Co are associated (or correlated) with Samlip General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samlip General Foods has no effect on the direction of Posco Chemical i.e., Posco Chemical and Samlip General go up and down completely randomly.
Pair Corralation between Posco Chemical and Samlip General
Assuming the 90 days trading horizon Posco Chemical Co is expected to generate 3.1 times more return on investment than Samlip General. However, Posco Chemical is 3.1 times more volatile than Samlip General Foods. It trades about 0.01 of its potential returns per unit of risk. Samlip General Foods is currently generating about -0.06 per unit of risk. If you would invest 18,854,900 in Posco Chemical Co on September 12, 2024 and sell it today you would lose (2,364,900) from holding Posco Chemical Co or give up 12.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posco Chemical Co vs. Samlip General Foods
Performance |
| Timeline |
| Posco Chemical |
| Samlip General Foods |
Posco Chemical and Samlip General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco Chemical and Samlip General
The main advantage of trading using opposite Posco Chemical and Samlip General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco Chemical position performs unexpectedly, Samlip General 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 Samlip General will offset losses from the drop in Samlip General's long position.| Posco Chemical vs. Kukdong Oil Chemicals | Posco Chemical vs. BGF Retail Co | Posco Chemical vs. Dongnam Chemical Co | Posco Chemical vs. Namhae Chemical |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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