Correlation Between POSCO Holdings and Hwacheon Machinery
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Hwacheon Machinery 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 Hwacheon Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Hwacheon Machinery Co, you can compare the effects of market volatilities on POSCO Holdings and Hwacheon Machinery 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 Hwacheon Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Hwacheon Machinery.
Diversification Opportunities for POSCO Holdings and Hwacheon Machinery
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between POSCO and Hwacheon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Hwacheon Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwacheon Machinery 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 Hwacheon Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwacheon Machinery has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Hwacheon Machinery go up and down completely randomly.
Pair Corralation between POSCO Holdings and Hwacheon Machinery
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Hwacheon Machinery. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 2.17 times less risky than Hwacheon Machinery. The stock trades about -0.14 of its potential returns per unit of risk. The Hwacheon Machinery Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 294,500 in Hwacheon Machinery Co on September 12, 2024 and sell it today you would earn a total of 46,000 from holding Hwacheon Machinery Co or generate 15.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Hwacheon Machinery Co
Performance |
| Timeline |
| POSCO Holdings |
| Hwacheon Machinery |
POSCO Holdings and Hwacheon Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Hwacheon Machinery
The main advantage of trading using opposite POSCO Holdings and Hwacheon Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Hwacheon Machinery 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 Hwacheon Machinery will offset losses from the drop in Hwacheon Machinery's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Hwacheon Machinery vs. Samsung Electronics Co | Hwacheon Machinery vs. Samsung Electronics Co | Hwacheon Machinery vs. SK Hynix | Hwacheon Machinery 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |