Correlation Between HMM and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both HMM and POSCO Holdings 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 HMM and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and POSCO Holdings, you can compare the effects of market volatilities on HMM and POSCO Holdings 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 HMM with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and POSCO Holdings.
Diversification Opportunities for HMM and POSCO Holdings
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HMM and POSCO is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and HMM 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 HMM Co are associated (or correlated) with POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of HMM i.e., HMM and POSCO Holdings go up and down completely randomly.
Pair Corralation between HMM and POSCO Holdings
Assuming the 90 days trading horizon HMM Co is expected to generate 0.6 times more return on investment than POSCO Holdings. However, HMM Co is 1.65 times less risky than POSCO Holdings. It trades about 0.3 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.1 per unit of risk. If you would invest 1,602,000 in HMM Co on September 13, 2024 and sell it today you would earn a total of 261,000 from holding HMM Co or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. POSCO Holdings
Performance |
| Timeline |
| HMM Co |
| POSCO Holdings |
HMM and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and POSCO Holdings
The main advantage of trading using opposite HMM and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| HMM vs. Korea New Network | HMM vs. Solution Advanced Technology | HMM vs. Busan Industrial Co | HMM vs. Busan Ind |
| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Hanwha Solutions | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |