Correlation Between POSCO Holdings and Mercury
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Mercury 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 Mercury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Mercury, you can compare the effects of market volatilities on POSCO Holdings and Mercury 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 Mercury. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Mercury.
Diversification Opportunities for POSCO Holdings and Mercury
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between POSCO and Mercury is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Mercury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury 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 Mercury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Mercury go up and down completely randomly.
Pair Corralation between POSCO Holdings and Mercury
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Mercury. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.3 times less risky than Mercury. The stock trades about -0.24 of its potential returns per unit of risk. The Mercury is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 360,000 in Mercury on September 3, 2024 and sell it today you would earn a total of 29,000 from holding Mercury or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Mercury
Performance |
| Timeline |
| POSCO Holdings |
| Mercury |
POSCO Holdings and Mercury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Mercury
The main advantage of trading using opposite POSCO Holdings and Mercury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Mercury 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 Mercury will offset losses from the drop in Mercury's long position.| POSCO Holdings vs. Echomarketing CoLtd | POSCO Holdings vs. Taeyang Metal Industrial | POSCO Holdings vs. Kukil Metal Co | POSCO Holdings vs. GS Retail Co |
| Mercury vs. Shinhan Financial Group | Mercury vs. Pyung Hwa Industrial | Mercury vs. Koryo Credit Information | Mercury vs. Eagon Industrial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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