Correlation Between Hyundai Steel and POSCO M
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and POSCO M 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 Hyundai Steel and POSCO M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and POSCO M TECH Co, you can compare the effects of market volatilities on Hyundai Steel and POSCO M 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 Hyundai Steel with a short position of POSCO M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and POSCO M.
Diversification Opportunities for Hyundai Steel and POSCO M
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and POSCO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and POSCO M TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO M TECH and Hyundai Steel 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 Hyundai Steel are associated (or correlated) with POSCO M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO M TECH has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and POSCO M go up and down completely randomly.
Pair Corralation between Hyundai Steel and POSCO M
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the POSCO M. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Steel is 1.3 times less risky than POSCO M. The stock trades about -0.45 of its potential returns per unit of risk. The POSCO M TECH Co is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 1,575,000 in POSCO M TECH Co on August 25, 2024 and sell it today you would lose (184,000) from holding POSCO M TECH Co or give up 11.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyundai Steel vs. POSCO M TECH Co
Performance |
| Timeline |
| Hyundai Steel |
| POSCO M TECH |
Hyundai Steel and POSCO M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and POSCO M
The main advantage of trading using opposite Hyundai Steel and POSCO M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, POSCO M 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 M will offset losses from the drop in POSCO M's long position.| Hyundai Steel vs. iNtRON Biotechnology | Hyundai Steel vs. FOODWELL Co | Hyundai Steel vs. Haitai Confectionery Foods | Hyundai Steel vs. GS Retail Co |
| POSCO M vs. LG Chemicals | POSCO M vs. POSCO Holdings | POSCO M vs. Lotte Chemical Corp | POSCO M vs. Hyundai Steel |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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