Correlation Between POSCO Holdings and Daechang Steel
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Daechang Steel 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 Daechang Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Daechang Steel Co, you can compare the effects of market volatilities on POSCO Holdings and Daechang Steel 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 Daechang Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Daechang Steel.
Diversification Opportunities for POSCO Holdings and Daechang Steel
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between POSCO and Daechang is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Daechang Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daechang Steel 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 Daechang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daechang Steel has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Daechang Steel go up and down completely randomly.
Pair Corralation between POSCO Holdings and Daechang Steel
Assuming the 90 days trading horizon POSCO Holdings is expected to generate 1.65 times more return on investment than Daechang Steel. However, POSCO Holdings is 1.65 times more volatile than Daechang Steel Co. It trades about 0.03 of its potential returns per unit of risk. Daechang Steel Co is currently generating about 0.02 per unit of risk. If you would invest 25,900,000 in POSCO Holdings on November 4, 2024 and sell it today you would earn a total of 150,000 from holding POSCO Holdings or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Daechang Steel Co
Performance |
| Timeline |
| POSCO Holdings |
| Daechang Steel |
POSCO Holdings and Daechang Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Daechang Steel
The main advantage of trading using opposite POSCO Holdings and Daechang Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Daechang Steel 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 Daechang Steel will offset losses from the drop in Daechang Steel's long position.| POSCO Holdings vs. Netmarble Games Corp | POSCO Holdings vs. HB Technology TD | POSCO Holdings vs. KG Eco Technology | POSCO Holdings vs. Hanjin Transportation Co |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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