Correlation Between Posco Chemical and Naver
Can any of the company-specific risk be diversified away by investing in both Posco Chemical and Naver 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 Naver 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 Naver, you can compare the effects of market volatilities on Posco Chemical and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco Chemical and Naver.
Diversification Opportunities for Posco Chemical and Naver
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Posco and Naver is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Posco Chemical Co and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Posco Chemical i.e., Posco Chemical and Naver go up and down completely randomly.
Pair Corralation between Posco Chemical and Naver
Assuming the 90 days trading horizon Posco Chemical Co is expected to generate 1.98 times more return on investment than Naver. However, Posco Chemical is 1.98 times more volatile than Naver. It trades about 0.02 of its potential returns per unit of risk. Naver is currently generating about 0.03 per unit of risk. If you would invest 17,807,400 in Posco Chemical Co on September 13, 2024 and sell it today you would lose (1,247,400) from holding Posco Chemical Co or give up 7.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posco Chemical Co vs. Naver
Performance |
| Timeline |
| Posco Chemical |
| Naver |
Posco Chemical and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco Chemical and Naver
The main advantage of trading using opposite Posco Chemical and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco Chemical position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| Posco Chemical vs. Dong A Steel Technology | Posco Chemical vs. Netmarble Games Corp | Posco Chemical vs. Guyoung Technology Co | Posco Chemical vs. Hwangkum Steel Technology |
| Naver vs. Duksan Hi Metal | Naver vs. Daiyang Metal Co | Naver vs. Hanjoo Light Metal | Naver vs. KB Financial Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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