Correlation Between POSCO Holdings and Samlip General
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Samlip General 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 Samlip General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Samlip General Foods, you can compare the effects of market volatilities on POSCO Holdings and Samlip General 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 Samlip General. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Samlip General.
Diversification Opportunities for POSCO Holdings and Samlip General
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and Samlip is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Samlip General Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samlip General Foods 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 Samlip General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samlip General Foods has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Samlip General go up and down completely randomly.
Pair Corralation between POSCO Holdings and Samlip General
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 2.18 times more return on investment than Samlip General. However, POSCO Holdings is 2.18 times more volatile than Samlip General Foods. It trades about 0.01 of its potential returns per unit of risk. Samlip General Foods is currently generating about -0.06 per unit of risk. If you would invest 27,524,600 in POSCO Holdings on September 12, 2024 and sell it today you would lose (424,600) from holding POSCO Holdings or give up 1.54% 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. Samlip General Foods
Performance |
| Timeline |
| POSCO Holdings |
| Samlip General Foods |
POSCO Holdings and Samlip General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Samlip General
The main advantage of trading using opposite POSCO Holdings and Samlip General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Samlip General 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 Samlip General will offset losses from the drop in Samlip General's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Samlip General vs. Samsung Electronics Co | Samlip General vs. Samsung Electronics Co | Samlip General vs. SK Hynix | Samlip General 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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