Correlation Between POSCO Holdings and Hyundai Steel
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Hyundai Steel 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 Hyundai Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Hyundai Steel, you can compare the effects of market volatilities on POSCO Holdings and Hyundai Steel 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 Hyundai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Hyundai Steel.
Diversification Opportunities for POSCO Holdings and Hyundai Steel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and Hyundai is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel 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 Hyundai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Steel has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Hyundai Steel go up and down completely randomly.
Pair Corralation between POSCO Holdings and Hyundai Steel
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 1.35 times more return on investment than Hyundai Steel. However, POSCO Holdings is 1.35 times more volatile than Hyundai Steel. It trades about 0.01 of its potential returns per unit of risk. Hyundai Steel is currently generating about -0.02 per unit of risk. If you would invest 29,150,400 in POSCO Holdings on November 2, 2024 and sell it today you would lose (3,000,400) from holding POSCO Holdings or give up 10.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Hyundai Steel
Performance |
| Timeline |
| POSCO Holdings |
| Hyundai Steel |
POSCO Holdings and Hyundai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Hyundai Steel
The main advantage of trading using opposite POSCO Holdings and Hyundai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Hyundai Steel 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 Hyundai Steel will offset losses from the drop in Hyundai Steel's long position.| POSCO Holdings vs. Display Tech Co | POSCO Holdings vs. Daishin Information Communications | POSCO Holdings vs. T3 Entertainment Co | POSCO Holdings vs. Tamul Multimedia Co |
| Hyundai Steel vs. Lotte Fine Chemical | Hyundai Steel vs. Kg Chemical | Hyundai Steel vs. Tae Kyung Chemical | Hyundai Steel vs. Adaptive Plasma Technology |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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