Correlation Between POSCO Holdings and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Moonbae 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 Moonbae 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 Moonbae Steel, you can compare the effects of market volatilities on POSCO Holdings and Moonbae 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 Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Moonbae Steel.
Diversification Opportunities for POSCO Holdings and Moonbae Steel
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between POSCO and Moonbae is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae 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 Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Moonbae Steel go up and down completely randomly.
Pair Corralation between POSCO Holdings and Moonbae Steel
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Moonbae Steel. In addition to that, POSCO Holdings is 1.25 times more volatile than Moonbae Steel. It trades about -0.12 of its total potential returns per unit of risk. Moonbae Steel is currently generating about 0.18 per unit of volatility. If you would invest 228,000 in Moonbae Steel on August 25, 2024 and sell it today you would earn a total of 27,000 from holding Moonbae Steel or generate 11.84% 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. Moonbae Steel
Performance |
| Timeline |
| POSCO Holdings |
| Moonbae Steel |
POSCO Holdings and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Moonbae Steel
The main advantage of trading using opposite POSCO Holdings and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Moonbae 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel | POSCO Holdings vs. Dongkuk Steel Mill |
| Moonbae Steel vs. LG Chemicals | Moonbae Steel vs. POSCO Holdings | Moonbae Steel vs. Lotte Chemical Corp | Moonbae Steel vs. Hyundai Steel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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