Correlation Between POSCO Holdings and Worldex Industry
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Worldex Industry 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 Worldex Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Worldex Industry Trading, you can compare the effects of market volatilities on POSCO Holdings and Worldex Industry 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 Worldex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Worldex Industry.
Diversification Opportunities for POSCO Holdings and Worldex Industry
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between POSCO and Worldex is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Worldex Industry Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldex Industry Trading 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 Worldex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldex Industry Trading has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Worldex Industry go up and down completely randomly.
Pair Corralation between POSCO Holdings and Worldex Industry
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Worldex Industry. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.04 times less risky than Worldex Industry. The stock trades about -0.1 of its potential returns per unit of risk. The Worldex Industry Trading is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,231,830 in Worldex Industry Trading on September 29, 2024 and sell it today you would lose (581,830) from holding Worldex Industry Trading or give up 26.07% 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. Worldex Industry Trading
Performance |
| Timeline |
| POSCO Holdings |
| Worldex Industry Trading |
POSCO Holdings and Worldex Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Worldex Industry
The main advantage of trading using opposite POSCO Holdings and Worldex Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Worldex Industry 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 Worldex Industry will offset losses from the drop in Worldex Industry's long position.| POSCO Holdings vs. Dongbu Insurance Co | POSCO Holdings vs. Settlebank | POSCO Holdings vs. Jeju Semiconductor Corp | POSCO Holdings vs. Kbi Metal Co |
| Worldex Industry vs. Dongsin Engineering Construction | Worldex Industry vs. Doosan Fuel Cell | Worldex Industry vs. Daishin Balance 1 | Worldex Industry 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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