Correlation Between POSCO Holdings and Sungwoo Electronics
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Sungwoo Electronics 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 Sungwoo Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Sungwoo Electronics Co, you can compare the effects of market volatilities on POSCO Holdings and Sungwoo Electronics 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 Sungwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Sungwoo Electronics.
Diversification Opportunities for POSCO Holdings and Sungwoo Electronics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Sungwoo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics 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 Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Sungwoo Electronics go up and down completely randomly.
Pair Corralation between POSCO Holdings and Sungwoo Electronics
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 1.03 times more return on investment than Sungwoo Electronics. However, POSCO Holdings is 1.03 times more volatile than Sungwoo Electronics Co. It trades about -0.16 of its potential returns per unit of risk. Sungwoo Electronics Co is currently generating about -0.29 per unit of risk. If you would invest 31,000,000 in POSCO Holdings on September 15, 2024 and sell it today you would lose (3,900,000) from holding POSCO Holdings or give up 12.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Sungwoo Electronics Co
Performance |
| Timeline |
| POSCO Holdings |
| Sungwoo Electronics |
POSCO Holdings and Sungwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Sungwoo Electronics
The main advantage of trading using opposite POSCO Holdings and Sungwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Sungwoo Electronics 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 Sungwoo Electronics will offset losses from the drop in Sungwoo Electronics' long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Sungwoo Electronics vs. Samsung Electronics Co | Sungwoo Electronics vs. Samsung Electronics Co | Sungwoo Electronics vs. SK Hynix | Sungwoo Electronics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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