Correlation Between POSCO Holdings and Sang A
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Sang A 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 Sang A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Sang A Frontec CoLtd, you can compare the effects of market volatilities on POSCO Holdings and Sang A 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 Sang A. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Sang A.
Diversification Opportunities for POSCO Holdings and Sang A
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and Sang is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Sang A Frontec CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sang A Frontec 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 Sang A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sang A Frontec has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Sang A go up and down completely randomly.
Pair Corralation between POSCO Holdings and Sang A
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Sang A. In addition to that, POSCO Holdings is 1.06 times more volatile than Sang A Frontec CoLtd. It trades about -0.2 of its total potential returns per unit of risk. Sang A Frontec CoLtd is currently generating about -0.07 per unit of volatility. If you would invest 2,060,000 in Sang A Frontec CoLtd on October 1, 2024 and sell it today you would lose (205,000) from holding Sang A Frontec CoLtd or give up 9.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Sang A Frontec CoLtd
Performance |
| Timeline |
| POSCO Holdings |
| Sang A Frontec |
POSCO Holdings and Sang A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Sang A
The main advantage of trading using opposite POSCO Holdings and Sang A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Sang A 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 Sang A will offset losses from the drop in Sang A's long position.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
| Sang A vs. Dongsin Engineering Construction | Sang A vs. Doosan Fuel Cell | Sang A vs. Daishin Balance 1 | Sang A vs. Total Soft Bank |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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