Correlation Between Leaders Technology and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Leaders Technology 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 Leaders Technology and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leaders Technology Investment and POSCO Holdings, you can compare the effects of market volatilities on Leaders Technology 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 Leaders Technology with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leaders Technology and POSCO Holdings.
Diversification Opportunities for Leaders Technology and POSCO Holdings
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Leaders and POSCO is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Leaders Technology Investment and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Leaders Technology 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 Leaders Technology Investment 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 Leaders Technology i.e., Leaders Technology and POSCO Holdings go up and down completely randomly.
Pair Corralation between Leaders Technology and POSCO Holdings
Assuming the 90 days trading horizon Leaders Technology Investment is expected to under-perform the POSCO Holdings. In addition to that, Leaders Technology is 1.41 times more volatile than POSCO Holdings. It trades about -0.16 of its total potential returns per unit of risk. POSCO Holdings is currently generating about -0.01 per unit of volatility. If you would invest 26,200,000 in POSCO Holdings on November 7, 2024 and sell it today you would lose (150,000) from holding POSCO Holdings or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leaders Technology Investment vs. POSCO Holdings
Performance |
| Timeline |
| Leaders Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| POSCO Holdings |
Leaders Technology and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leaders Technology and POSCO Holdings
The main advantage of trading using opposite Leaders Technology and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leaders Technology 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.| Leaders Technology vs. KB Financial Group | Leaders Technology vs. Shinhan Financial Group | Leaders Technology vs. Hana Financial | Leaders Technology vs. Samsung Electronics Co |
| POSCO Holdings vs. Dongil Technology | POSCO Holdings vs. KG Eco Technology | POSCO Holdings vs. Puloon Technology | POSCO Holdings vs. SK Chemicals Co |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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