Correlation Between POSCO Holdings and Naver
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Naver 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 Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Naver, you can compare the effects of market volatilities on POSCO Holdings and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Naver.
Diversification Opportunities for POSCO Holdings and Naver
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between POSCO and Naver is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Naver go up and down completely randomly.
Pair Corralation between POSCO Holdings and Naver
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Naver. In addition to that, POSCO Holdings is 2.04 times more volatile than Naver. It trades about -0.16 of its total potential returns per unit of risk. Naver is currently generating about 0.36 per unit of volatility. If you would invest 17,040,000 in Naver on August 29, 2024 and sell it today you would earn a total of 2,520,000 from holding Naver or generate 14.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Naver
Performance |
| Timeline |
| POSCO Holdings |
| Naver |
POSCO Holdings and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Naver
The main advantage of trading using opposite POSCO Holdings and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| POSCO Holdings vs. SM Entertainment Co | POSCO Holdings vs. T3 Entertainment Co | POSCO Holdings vs. Visang Education | POSCO Holdings vs. Cuckoo Homesys Co |
| Naver vs. Korea New Network | Naver vs. Busan Industrial Co | Naver vs. Busan Ind | Naver vs. Shinhan WTI Futures |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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