Correlation Between POSCO Holdings and Webzen
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Webzen 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 Webzen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Webzen Inc, you can compare the effects of market volatilities on POSCO Holdings and Webzen 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 Webzen. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Webzen.
Diversification Opportunities for POSCO Holdings and Webzen
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between POSCO and Webzen is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Webzen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webzen Inc 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 Webzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webzen Inc has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Webzen go up and down completely randomly.
Pair Corralation between POSCO Holdings and Webzen
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 2.15 times more return on investment than Webzen. However, POSCO Holdings is 2.15 times more volatile than Webzen Inc. It trades about 0.16 of its potential returns per unit of risk. Webzen Inc is currently generating about -0.02 per unit of risk. If you would invest 26,050,000 in POSCO Holdings on November 27, 2024 and sell it today you would earn a total of 2,050,000 from holding POSCO Holdings or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Webzen Inc
Performance |
| Timeline |
| POSCO Holdings |
| Webzen Inc |
POSCO Holdings and Webzen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Webzen
The main advantage of trading using opposite POSCO Holdings and Webzen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Webzen 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 Webzen will offset losses from the drop in Webzen's long position.| POSCO Holdings vs. Playgram Co | POSCO Holdings vs. INFINITT Healthcare Co | POSCO Holdings vs. Puloon Technology | POSCO Holdings vs. People Technology |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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