Correlation Between POSCO Holdings and Tae Kyung
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Tae Kyung 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 Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Tae Kyung Chemical, you can compare the effects of market volatilities on POSCO Holdings and Tae Kyung 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 Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Tae Kyung.
Diversification Opportunities for POSCO Holdings and Tae Kyung
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between POSCO and Tae is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical 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 Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Tae Kyung go up and down completely randomly.
Pair Corralation between POSCO Holdings and Tae Kyung
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Tae Kyung. In addition to that, POSCO Holdings is 1.39 times more volatile than Tae Kyung Chemical. It trades about -0.06 of its total potential returns per unit of risk. Tae Kyung Chemical is currently generating about -0.04 per unit of volatility. If you would invest 1,450,321 in Tae Kyung Chemical on September 12, 2024 and sell it today you would lose (408,321) from holding Tae Kyung Chemical or give up 28.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Tae Kyung Chemical
Performance |
| Timeline |
| POSCO Holdings |
| Tae Kyung Chemical |
POSCO Holdings and Tae Kyung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Tae Kyung
The main advantage of trading using opposite POSCO Holdings and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Tae Kyung vs. Samsung Electronics Co | Tae Kyung vs. Samsung Electronics Co | Tae Kyung vs. SK Hynix | Tae Kyung 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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