Correlation Between Keyang Electric and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Keyang Electric 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 Keyang Electric and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and POSCO Holdings, you can compare the effects of market volatilities on Keyang Electric 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 Keyang Electric with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and POSCO Holdings.
Diversification Opportunities for Keyang Electric and POSCO Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Keyang and POSCO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Keyang Electric 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 Keyang Electric Machinery 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 Keyang Electric i.e., Keyang Electric and POSCO Holdings go up and down completely randomly.
Pair Corralation between Keyang Electric and POSCO Holdings
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to under-perform the POSCO Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Keyang Electric Machinery is 1.24 times less risky than POSCO Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The POSCO Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 27,666,600 in POSCO Holdings on September 28, 2024 and sell it today you would lose (2,066,600) from holding POSCO Holdings or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. POSCO Holdings
Performance |
| Timeline |
| Keyang Electric Machinery |
| POSCO Holdings |
Keyang Electric and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and POSCO Holdings
The main advantage of trading using opposite Keyang Electric and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric 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.| Keyang Electric vs. Korean Reinsurance Co | Keyang Electric vs. LG Uplus | Keyang Electric vs. ASTORY CoLtd | Keyang Electric vs. Jb Financial |
| POSCO Holdings vs. Dongbang Ship Machinery | POSCO Holdings vs. Dongkuk Structures Construction | POSCO Holdings vs. Seohee Construction Co | POSCO Holdings vs. Keyang Electric Machinery |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |