Correlation Between POSCO Holdings and HMM
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and HMM 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 HMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and HMM Co, you can compare the effects of market volatilities on POSCO Holdings and HMM 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 HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and HMM.
Diversification Opportunities for POSCO Holdings and HMM
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between POSCO and HMM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co 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 HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and HMM go up and down completely randomly.
Pair Corralation between POSCO Holdings and HMM
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the HMM. In addition to that, POSCO Holdings is 1.22 times more volatile than HMM Co. It trades about -0.14 of its total potential returns per unit of risk. HMM Co is currently generating about 0.1 per unit of volatility. If you would invest 1,655,000 in HMM Co on September 12, 2024 and sell it today you would earn a total of 222,000 from holding HMM Co or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. HMM Co
Performance |
| Timeline |
| POSCO Holdings |
| HMM Co |
POSCO Holdings and HMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and HMM
The main advantage of trading using opposite POSCO Holdings and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.| POSCO Holdings vs. Histeel | POSCO Holdings vs. DB Financial Investment | POSCO Holdings vs. Sangsangin Investment Securities | POSCO Holdings vs. Hankuk Steel Wire |
| HMM vs. Korea New Network | HMM vs. Solution Advanced Technology | HMM vs. Busan Industrial Co | HMM vs. Busan Ind |
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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