Correlation Between POSCO Holdings and Cenit Co
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Cenit Co 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 Cenit Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Cenit Co, you can compare the effects of market volatilities on POSCO Holdings and Cenit Co 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 Cenit Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Cenit Co.
Diversification Opportunities for POSCO Holdings and Cenit Co
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Cenit is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Cenit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenit Co 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 Cenit Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenit Co has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Cenit Co go up and down completely randomly.
Pair Corralation between POSCO Holdings and Cenit Co
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Cenit Co. In addition to that, POSCO Holdings is 1.32 times more volatile than Cenit Co. It trades about -0.09 of its total potential returns per unit of risk. Cenit Co is currently generating about 0.01 per unit of volatility. If you would invest 148,867 in Cenit Co on September 12, 2024 and sell it today you would earn a total of 633.00 from holding Cenit Co or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Cenit Co
Performance |
| Timeline |
| POSCO Holdings |
| Cenit Co |
POSCO Holdings and Cenit Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Cenit Co
The main advantage of trading using opposite POSCO Holdings and Cenit Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Cenit Co 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 Cenit Co will offset losses from the drop in Cenit Co's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Cenit Co vs. Nable Communications | Cenit Co vs. Daesung Hi Tech Co | Cenit Co vs. Digital Power Communications | Cenit Co vs. Korea Computer |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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