Correlation Between POSCO Holdings and Seoul Food
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Seoul Food 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 Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Seoul Food Industrial, you can compare the effects of market volatilities on POSCO Holdings and Seoul Food 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 Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Seoul Food.
Diversification Opportunities for POSCO Holdings and Seoul Food
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and Seoul is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial 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 Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Seoul Food go up and down completely randomly.
Pair Corralation between POSCO Holdings and Seoul Food
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Seoul Food. In addition to that, POSCO Holdings is 1.85 times more volatile than Seoul Food Industrial. It trades about -0.09 of its total potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.07 per unit of volatility. If you would invest 18,900 in Seoul Food Industrial on September 14, 2024 and sell it today you would lose (4,100) from holding Seoul Food Industrial or give up 21.69% 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. Seoul Food Industrial
Performance |
| Timeline |
| POSCO Holdings |
| Seoul Food Industrial |
POSCO Holdings and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Seoul Food
The main advantage of trading using opposite POSCO Holdings and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Seoul Food vs. Samsung Electronics Co | Seoul Food vs. Samsung Electronics Co | Seoul Food vs. SK Hynix | Seoul Food vs. POSCO Holdings |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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