Correlation Between Posco ICT and Sungwoo Hitech
Can any of the company-specific risk be diversified away by investing in both Posco ICT and Sungwoo Hitech 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 Sungwoo Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco ICT and Sungwoo Hitech Co, you can compare the effects of market volatilities on Posco ICT and Sungwoo Hitech 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 Sungwoo Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco ICT and Sungwoo Hitech.
Diversification Opportunities for Posco ICT and Sungwoo Hitech
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Posco and Sungwoo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Posco ICT and Sungwoo Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Hitech 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 Sungwoo Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Hitech has no effect on the direction of Posco ICT i.e., Posco ICT and Sungwoo Hitech go up and down completely randomly.
Pair Corralation between Posco ICT and Sungwoo Hitech
Assuming the 90 days trading horizon Posco ICT is expected to generate 1.58 times more return on investment than Sungwoo Hitech. However, Posco ICT is 1.58 times more volatile than Sungwoo Hitech Co. It trades about 0.06 of its potential returns per unit of risk. Sungwoo Hitech Co is currently generating about -0.03 per unit of risk. If you would invest 1,245,312 in Posco ICT on August 31, 2024 and sell it today you would earn a total of 989,688 from holding Posco ICT or generate 79.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Posco ICT vs. Sungwoo Hitech Co
Performance |
| Timeline |
| Posco ICT |
| Sungwoo Hitech |
Posco ICT and Sungwoo Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco ICT and Sungwoo Hitech
The main advantage of trading using opposite Posco ICT and Sungwoo Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco ICT position performs unexpectedly, Sungwoo Hitech 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 Sungwoo Hitech will offset losses from the drop in Sungwoo Hitech's long position.| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor Co |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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