Correlation Between POSCO Holdings and ITM Semiconductor
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and ITM Semiconductor 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 ITM Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and ITM Semiconductor Co, you can compare the effects of market volatilities on POSCO Holdings and ITM Semiconductor 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 ITM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and ITM Semiconductor.
Diversification Opportunities for POSCO Holdings and ITM Semiconductor
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and ITM is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor 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 ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and ITM Semiconductor go up and down completely randomly.
Pair Corralation between POSCO Holdings and ITM Semiconductor
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 1.04 times more return on investment than ITM Semiconductor. However, POSCO Holdings is 1.04 times more volatile than ITM Semiconductor Co. It trades about 0.16 of its potential returns per unit of risk. ITM Semiconductor Co is currently generating about 0.12 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. ITM Semiconductor Co
Performance |
| Timeline |
| POSCO Holdings |
| ITM Semiconductor |
POSCO Holdings and ITM Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and ITM Semiconductor
The main advantage of trading using opposite POSCO Holdings and ITM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, ITM Semiconductor 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 ITM Semiconductor will offset losses from the drop in ITM Semiconductor's long position.| POSCO Holdings vs. Playgram Co | POSCO Holdings vs. INFINITT Healthcare Co | POSCO Holdings vs. Puloon Technology | POSCO Holdings vs. People Technology |
| ITM Semiconductor vs. SS TECH | ITM Semiconductor vs. LEENO Industrial | ITM Semiconductor vs. Wonik Ips Co | ITM Semiconductor vs. SFA Semicon Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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