Correlation Between POSCO Holdings and Soulbrain Holdings
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Soulbrain Holdings 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 Soulbrain Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Soulbrain Holdings Co, you can compare the effects of market volatilities on POSCO Holdings and Soulbrain Holdings 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 Soulbrain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Soulbrain Holdings.
Diversification Opportunities for POSCO Holdings and Soulbrain Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and Soulbrain is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Soulbrain Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soulbrain Holdings 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 Soulbrain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soulbrain Holdings has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Soulbrain Holdings go up and down completely randomly.
Pair Corralation between POSCO Holdings and Soulbrain Holdings
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 1.2 times more return on investment than Soulbrain Holdings. However, POSCO Holdings is 1.2 times more volatile than Soulbrain Holdings Co. It trades about -0.17 of its potential returns per unit of risk. Soulbrain Holdings Co is currently generating about -0.37 per unit of risk. If you would invest 34,950,000 in POSCO Holdings on August 29, 2024 and sell it today you would lose (4,700,000) from holding POSCO Holdings or give up 13.45% 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. Soulbrain Holdings Co
Performance |
| Timeline |
| POSCO Holdings |
| Soulbrain Holdings |
POSCO Holdings and Soulbrain Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Soulbrain Holdings
The main advantage of trading using opposite POSCO Holdings and Soulbrain Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Soulbrain Holdings 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 Soulbrain Holdings will offset losses from the drop in Soulbrain Holdings' long position.| POSCO Holdings vs. Top Material Co | POSCO Holdings vs. LS Materials | POSCO Holdings vs. Nable Communications | POSCO Holdings vs. SK Telecom Co |
| Soulbrain Holdings vs. LG Chemicals | Soulbrain Holdings vs. Lotte Chemical Corp | Soulbrain Holdings vs. Hyundai Steel | Soulbrain Holdings vs. Seah Steel Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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