Correlation Between POSCO Holdings and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Namhae 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 Namhae 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 Namhae Chemical, you can compare the effects of market volatilities on POSCO Holdings and Namhae 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Namhae Chemical.
Diversification Opportunities for POSCO Holdings and Namhae Chemical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Namhae is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Namhae Chemical go up and down completely randomly.
Pair Corralation between POSCO Holdings and Namhae Chemical
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 2.25 times more return on investment than Namhae Chemical. However, POSCO Holdings is 2.25 times more volatile than Namhae Chemical. It trades about -0.01 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.06 per unit of risk. If you would invest 37,755,900 in POSCO Holdings on September 2, 2024 and sell it today you would lose (9,505,900) from holding POSCO Holdings or give up 25.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Namhae Chemical
Performance |
| Timeline |
| POSCO Holdings |
| Namhae Chemical |
POSCO Holdings and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Namhae Chemical
The main advantage of trading using opposite POSCO Holdings and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Namhae 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| POSCO Holdings vs. Ssangyong Information Communication | POSCO Holdings vs. Daejoo Electronic Materials | POSCO Holdings vs. EV Advanced Material | POSCO Holdings vs. Daishin Information Communications |
| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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