Correlation Between POSCO M and Orbitech
Can any of the company-specific risk be diversified away by investing in both POSCO M and Orbitech 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 M and Orbitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO M TECH Co and Orbitech Co, you can compare the effects of market volatilities on POSCO M and Orbitech 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 M with a short position of Orbitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO M and Orbitech.
Diversification Opportunities for POSCO M and Orbitech
Average diversification
The 3 months correlation between POSCO and Orbitech is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding POSCO M TECH Co and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and POSCO M 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 M TECH Co are associated (or correlated) with Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of POSCO M i.e., POSCO M and Orbitech go up and down completely randomly.
Pair Corralation between POSCO M and Orbitech
Assuming the 90 days trading horizon POSCO M TECH Co is expected to under-perform the Orbitech. But the stock apears to be less risky and, when comparing its historical volatility, POSCO M TECH Co is 1.06 times less risky than Orbitech. The stock trades about -0.2 of its potential returns per unit of risk. The Orbitech Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 247,000 in Orbitech Co on August 25, 2024 and sell it today you would lose (11,000) from holding Orbitech Co or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
POSCO M TECH Co vs. Orbitech Co
Performance |
| Timeline |
| POSCO M TECH |
| Orbitech |
POSCO M and Orbitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO M and Orbitech
The main advantage of trading using opposite POSCO M and Orbitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO M position performs unexpectedly, Orbitech 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 Orbitech will offset losses from the drop in Orbitech's long position.| POSCO M vs. LG Chemicals | POSCO M vs. POSCO Holdings | POSCO M vs. Lotte Chemical Corp | POSCO M vs. Hyundai Steel |
| Orbitech vs. Samsung Electronics Co | Orbitech vs. Samsung Electronics Co | Orbitech vs. Hyundai Motor Co | Orbitech vs. Hyundai Motor |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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