Correlation Between POSCO Holdings and KPX Chemical
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and KPX Chemical 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 KPX Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and KPX Chemical, you can compare the effects of market volatilities on POSCO Holdings and KPX Chemical 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 KPX Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and KPX Chemical.
Diversification Opportunities for POSCO Holdings and KPX Chemical
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and KPX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and KPX Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX 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 KPX Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Chemical has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and KPX Chemical go up and down completely randomly.
Pair Corralation between POSCO Holdings and KPX Chemical
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the KPX Chemical. In addition to that, POSCO Holdings is 2.55 times more volatile than KPX Chemical. It trades about -0.11 of its total potential returns per unit of risk. KPX Chemical is currently generating about -0.12 per unit of volatility. If you would invest 4,805,000 in KPX Chemical on November 2, 2024 and sell it today you would lose (560,000) from holding KPX Chemical or give up 11.65% 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. KPX Chemical
Performance |
| Timeline |
| POSCO Holdings |
| KPX Chemical |
POSCO Holdings and KPX Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and KPX Chemical
The main advantage of trading using opposite POSCO Holdings and KPX Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, KPX Chemical 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 KPX Chemical will offset losses from the drop in KPX Chemical's long position.| POSCO Holdings vs. Nice Information Telecommunication | POSCO Holdings vs. Korea Information Communications | POSCO Holdings vs. Sangsin Energy Display | POSCO Holdings vs. Innowireless Co |
| KPX Chemical vs. Sangsin Energy Display | KPX Chemical vs. GS Retail Co | KPX Chemical vs. Korea Air Svc | KPX Chemical vs. Mobileleader CoLtd |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Transaction History View history of all your transactions and understand their impact on performance |