Correlation Between POSCO Holdings and BooKook Steel
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and BooKook 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 BooKook 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 BooKook Steel Co, you can compare the effects of market volatilities on POSCO Holdings and BooKook 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 BooKook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and BooKook Steel.
Diversification Opportunities for POSCO Holdings and BooKook Steel
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and BooKook is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and BooKook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BooKook 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 BooKook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BooKook Steel has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and BooKook Steel go up and down completely randomly.
Pair Corralation between POSCO Holdings and BooKook Steel
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the BooKook Steel. In addition to that, POSCO Holdings is 1.5 times more volatile than BooKook Steel Co. It trades about -0.2 of its total potential returns per unit of risk. BooKook Steel Co is currently generating about -0.12 per unit of volatility. If you would invest 268,500 in BooKook Steel Co on September 13, 2024 and sell it today you would lose (29,500) from holding BooKook Steel Co or give up 10.99% 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. BooKook Steel Co
Performance |
| Timeline |
| POSCO Holdings |
| BooKook Steel |
POSCO Holdings and BooKook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and BooKook Steel
The main advantage of trading using opposite POSCO Holdings and BooKook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, BooKook 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 BooKook Steel will offset losses from the drop in BooKook Steel'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 |
| BooKook Steel vs. Samsung Electronics Co | BooKook Steel vs. Samsung Electronics Co | BooKook Steel vs. SK Hynix | BooKook Steel 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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