Correlation Between POSCO Holdings and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Hyundai Engineering 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 Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Hyundai Engineering Plastics, you can compare the effects of market volatilities on POSCO Holdings and Hyundai Engineering 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 Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Hyundai Engineering.
Diversification Opportunities for POSCO Holdings and Hyundai Engineering
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between POSCO and Hyundai is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering 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 Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Hyundai Engineering go up and down completely randomly.
Pair Corralation between POSCO Holdings and Hyundai Engineering
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Hyundai Engineering. In addition to that, POSCO Holdings is 1.16 times more volatile than Hyundai Engineering Plastics. It trades about -0.09 of its total potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about -0.05 per unit of volatility. If you would invest 462,595 in Hyundai Engineering Plastics on September 14, 2024 and sell it today you would lose (114,095) from holding Hyundai Engineering Plastics or give up 24.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| POSCO Holdings |
| Hyundai Engineering |
POSCO Holdings and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Hyundai Engineering
The main advantage of trading using opposite POSCO Holdings and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Hyundai Engineering vs. Dongbu Insurance Co | Hyundai Engineering vs. Vissem Electronics Co | Hyundai Engineering vs. Hana Financial | Hyundai Engineering vs. KakaoBank Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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