Correlation Between POSCO Holdings and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Ssangyong Materials 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 Ssangyong Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Ssangyong Materials Corp, you can compare the effects of market volatilities on POSCO Holdings and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Ssangyong Materials.
Diversification Opportunities for POSCO Holdings and Ssangyong Materials
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between POSCO and Ssangyong is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Ssangyong Materials go up and down completely randomly.
Pair Corralation between POSCO Holdings and Ssangyong Materials
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Ssangyong Materials. In addition to that, POSCO Holdings is 1.02 times more volatile than Ssangyong Materials Corp. It trades about -0.04 of its total potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.08 per unit of volatility. If you would invest 216,000 in Ssangyong Materials Corp on September 14, 2024 and sell it today you would earn a total of 10,500 from holding Ssangyong Materials Corp or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Ssangyong Materials Corp
Performance |
| Timeline |
| POSCO Holdings |
| Ssangyong Materials Corp |
POSCO Holdings and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Ssangyong Materials
The main advantage of trading using opposite POSCO Holdings and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Ssangyong Materials vs. Samsung Electronics Co | Ssangyong Materials vs. Samsung Electronics Co | Ssangyong Materials vs. SK Hynix | Ssangyong Materials 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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