Correlation Between POSCO Holdings and Ecopro
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Ecopro 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 Ecopro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Ecopro Co, you can compare the effects of market volatilities on POSCO Holdings and Ecopro 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 Ecopro. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Ecopro.
Diversification Opportunities for POSCO Holdings and Ecopro
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Ecopro is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Ecopro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro 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 Ecopro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Ecopro go up and down completely randomly.
Pair Corralation between POSCO Holdings and Ecopro
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Ecopro. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.1 times less risky than Ecopro. The stock trades about -0.17 of its potential returns per unit of risk. The Ecopro Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 8,240,000 in Ecopro Co on August 28, 2024 and sell it today you would lose (350,000) from holding Ecopro Co or give up 4.25% 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. Ecopro Co
Performance |
| Timeline |
| POSCO Holdings |
| Ecopro |
POSCO Holdings and Ecopro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Ecopro
The main advantage of trading using opposite POSCO Holdings and Ecopro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Ecopro 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 Ecopro will offset losses from the drop in Ecopro's long position.| POSCO Holdings vs. TS Investment Corp | POSCO Holdings vs. KT Submarine Telecom | POSCO Holdings vs. Korea Information Communications | POSCO Holdings vs. ECSTELECOM 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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