Correlation Between Posco Chemical and HuMC
Can any of the company-specific risk be diversified away by investing in both Posco Chemical and HuMC 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 HuMC 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 HuMC Co, you can compare the effects of market volatilities on Posco Chemical and HuMC 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 HuMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco Chemical and HuMC.
Diversification Opportunities for Posco Chemical and HuMC
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Posco and HuMC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Posco Chemical Co and HuMC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HuMC 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 HuMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HuMC has no effect on the direction of Posco Chemical i.e., Posco Chemical and HuMC go up and down completely randomly.
Pair Corralation between Posco Chemical and HuMC
Assuming the 90 days trading horizon Posco Chemical Co is expected to under-perform the HuMC. In addition to that, Posco Chemical is 2.56 times more volatile than HuMC Co. It trades about -0.24 of its total potential returns per unit of risk. HuMC Co is currently generating about -0.06 per unit of volatility. If you would invest 99,000 in HuMC Co on September 13, 2024 and sell it today you would lose (2,400) from holding HuMC Co or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Posco Chemical Co vs. HuMC Co
Performance |
| Timeline |
| Posco Chemical |
| HuMC |
Posco Chemical and HuMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco Chemical and HuMC
The main advantage of trading using opposite Posco Chemical and HuMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco Chemical position performs unexpectedly, HuMC 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 HuMC will offset losses from the drop in HuMC'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 |
| HuMC vs. Samsung Electronics Co | HuMC vs. Samsung Electronics Co | HuMC vs. LG Energy Solution | HuMC vs. SK Hynix |
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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