Correlation Between Posco ICT and NH Investment
Can any of the company-specific risk be diversified away by investing in both Posco ICT and NH Investment 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 ICT and NH Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco ICT and NH Investment Securities, you can compare the effects of market volatilities on Posco ICT and NH Investment 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 ICT with a short position of NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco ICT and NH Investment.
Diversification Opportunities for Posco ICT and NH Investment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Posco and 005940 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Posco ICT and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and Posco ICT 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 ICT are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Posco ICT i.e., Posco ICT and NH Investment go up and down completely randomly.
Pair Corralation between Posco ICT and NH Investment
Assuming the 90 days trading horizon Posco ICT is expected to under-perform the NH Investment. In addition to that, Posco ICT is 2.14 times more volatile than NH Investment Securities. It trades about -0.16 of its total potential returns per unit of risk. NH Investment Securities is currently generating about 0.0 per unit of volatility. If you would invest 1,366,000 in NH Investment Securities on September 12, 2024 and sell it today you would lose (4,000) from holding NH Investment Securities or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posco ICT vs. NH Investment Securities
Performance |
| Timeline |
| Posco ICT |
| NH Investment Securities |
Posco ICT and NH Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco ICT and NH Investment
The main advantage of trading using opposite Posco ICT and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco ICT position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor Co |
| NH Investment vs. KB Financial Group | NH Investment vs. Shinhan Financial Group | NH Investment vs. Hana Financial | NH Investment vs. Woori Financial Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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