Correlation Between POSCO Holdings and People Technology
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and People Technology 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 People Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and People Technology, you can compare the effects of market volatilities on POSCO Holdings and People Technology 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 People Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and People Technology.
Diversification Opportunities for POSCO Holdings and People Technology
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between POSCO and People is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and People Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People Technology 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 People Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Technology has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and People Technology go up and down completely randomly.
Pair Corralation between POSCO Holdings and People Technology
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the People Technology. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.35 times less risky than People Technology. The stock trades about -0.13 of its potential returns per unit of risk. The People Technology is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 4,423,466 in People Technology on October 20, 2024 and sell it today you would lose (348,466) from holding People Technology or give up 7.88% 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. People Technology
Performance |
| Timeline |
| POSCO Holdings |
| People Technology |
POSCO Holdings and People Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and People Technology
The main advantage of trading using opposite POSCO Holdings and People Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, People Technology 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 People Technology will offset losses from the drop in People Technology's long position.| POSCO Holdings vs. Formetal Co | POSCO Holdings vs. DSC Investment | POSCO Holdings vs. LEENO Industrial | POSCO Holdings vs. TS Investment Corp |
| People Technology vs. Netmarble Games Corp | People Technology vs. Korea Shipbuilding Offshore | People Technology vs. ChipsMedia | People Technology vs. Sam Yang Foods |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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