Correlation Between POSCO Holdings and Husteel
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Husteel 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 Husteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Husteel, you can compare the effects of market volatilities on POSCO Holdings and Husteel 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 Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Husteel.
Diversification Opportunities for POSCO Holdings and Husteel
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between POSCO and Husteel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel 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 Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Husteel go up and down completely randomly.
Pair Corralation between POSCO Holdings and Husteel
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 6.29 times less return on investment than Husteel. But when comparing it to its historical volatility, POSCO Holdings is 1.39 times less risky than Husteel. It trades about 0.09 of its potential returns per unit of risk. Husteel is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 380,500 in Husteel on October 28, 2024 and sell it today you would earn a total of 89,500 from holding Husteel or generate 23.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Husteel
Performance |
| Timeline |
| POSCO Holdings |
| Husteel |
POSCO Holdings and Husteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Husteel
The main advantage of trading using opposite POSCO Holdings and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Husteel 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 Husteel will offset losses from the drop in Husteel's long position.| POSCO Holdings vs. Tae Kyung Chemical | POSCO Holdings vs. Cuckoo Electronics Co | POSCO Holdings vs. Hanwha Chemical Corp | POSCO Holdings vs. Daewon Chemical Co |
| Husteel vs. LG Chemicals | Husteel vs. POSCO Holdings | Husteel vs. Hanwha Solutions | Husteel vs. Lotte Chemical Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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