Correlation Between Posco Chemical and THiRA-UTECH

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Can any of the company-specific risk be diversified away by investing in both Posco Chemical and THiRA-UTECH 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 THiRA-UTECH 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 THiRA UTECH LTD, you can compare the effects of market volatilities on Posco Chemical and THiRA-UTECH 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 THiRA-UTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco Chemical and THiRA-UTECH.

Diversification Opportunities for Posco Chemical and THiRA-UTECH

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Posco and THiRA-UTECH is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Posco Chemical Co and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD 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 THiRA-UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of Posco Chemical i.e., Posco Chemical and THiRA-UTECH go up and down completely randomly.

Pair Corralation between Posco Chemical and THiRA-UTECH

Assuming the 90 days trading horizon Posco Chemical Co is expected to generate 1.21 times more return on investment than THiRA-UTECH. However, Posco Chemical is 1.21 times more volatile than THiRA UTECH LTD. It trades about -0.1 of its potential returns per unit of risk. THiRA UTECH LTD is currently generating about -0.13 per unit of risk. If you would invest  18,520,000  in Posco Chemical Co on September 15, 2024 and sell it today you would lose (1,840,000) from holding Posco Chemical Co or give up 9.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Posco Chemical Co  vs.  THiRA UTECH LTD

 Performance 
       Timeline  
Posco Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Posco Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
THiRA UTECH LTD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days THiRA UTECH LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, THiRA-UTECH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Posco Chemical and THiRA-UTECH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Posco Chemical and THiRA-UTECH

The main advantage of trading using opposite Posco Chemical and THiRA-UTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco Chemical position performs unexpectedly, THiRA-UTECH 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 THiRA-UTECH will offset losses from the drop in THiRA-UTECH's long position.
The idea behind Posco Chemical Co and THiRA UTECH LTD 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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