Correlation Between POSCO Holdings and Itcen Co
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Itcen Co 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 Itcen Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Itcen Co, you can compare the effects of market volatilities on POSCO Holdings and Itcen Co 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 Itcen Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Itcen Co.
Diversification Opportunities for POSCO Holdings and Itcen Co
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Itcen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Itcen Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itcen Co 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 Itcen Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itcen Co has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Itcen Co go up and down completely randomly.
Pair Corralation between POSCO Holdings and Itcen Co
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Itcen Co. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 2.25 times less risky than Itcen Co. The stock trades about -0.29 of its potential returns per unit of risk. The Itcen Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 594,000 in Itcen Co on September 28, 2024 and sell it today you would lose (48,000) from holding Itcen Co or give up 8.08% 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. Itcen Co
Performance |
| Timeline |
| POSCO Holdings |
| Itcen Co |
POSCO Holdings and Itcen Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Itcen Co
The main advantage of trading using opposite POSCO Holdings and Itcen Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Itcen Co 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 Itcen Co will offset losses from the drop in Itcen Co's long position.| POSCO Holdings vs. Dongbang Ship Machinery | POSCO Holdings vs. Dongkuk Structures Construction | POSCO Holdings vs. Seohee Construction Co | POSCO Holdings vs. Keyang Electric Machinery |
| Itcen Co vs. Dongsin Engineering Construction | Itcen Co vs. Doosan Fuel Cell | Itcen Co vs. Daishin Balance 1 | Itcen Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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