Correlation Between POSCO Holdings and Bukwang Pharm
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Bukwang Pharm 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 Holdings and Bukwang Pharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Bukwang Pharm, you can compare the effects of market volatilities on POSCO Holdings and Bukwang Pharm 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 Holdings with a short position of Bukwang Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Bukwang Pharm.
Diversification Opportunities for POSCO Holdings and Bukwang Pharm
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Bukwang is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Bukwang Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukwang Pharm and POSCO Holdings 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 Holdings are associated (or correlated) with Bukwang Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukwang Pharm has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Bukwang Pharm go up and down completely randomly.
Pair Corralation between POSCO Holdings and Bukwang Pharm
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Bukwang Pharm. In addition to that, POSCO Holdings is 1.22 times more volatile than Bukwang Pharm. It trades about -0.07 of its total potential returns per unit of risk. Bukwang Pharm is currently generating about -0.06 per unit of volatility. If you would invest 574,000 in Bukwang Pharm on September 2, 2024 and sell it today you would lose (104,000) from holding Bukwang Pharm or give up 18.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Bukwang Pharm
Performance |
| Timeline |
| POSCO Holdings |
| Bukwang Pharm |
POSCO Holdings and Bukwang Pharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Bukwang Pharm
The main advantage of trading using opposite POSCO Holdings and Bukwang Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Bukwang Pharm 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 Bukwang Pharm will offset losses from the drop in Bukwang Pharm's long position.| POSCO Holdings vs. Ssangyong Information Communication | POSCO Holdings vs. Daejoo Electronic Materials | POSCO Holdings vs. EV Advanced Material | POSCO Holdings vs. Daishin Information Communications |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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