Correlation Between Posco ICT and Total Soft
Can any of the company-specific risk be diversified away by investing in both Posco ICT and Total Soft 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 Total Soft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco ICT and Total Soft Bank, you can compare the effects of market volatilities on Posco ICT and Total Soft 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 Total Soft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco ICT and Total Soft.
Diversification Opportunities for Posco ICT and Total Soft
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Posco and Total is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Posco ICT and Total Soft Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Soft Bank 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 Total Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Soft Bank has no effect on the direction of Posco ICT i.e., Posco ICT and Total Soft go up and down completely randomly.
Pair Corralation between Posco ICT and Total Soft
Assuming the 90 days trading horizon Posco ICT is expected to under-perform the Total Soft. But the stock apears to be less risky and, when comparing its historical volatility, Posco ICT is 1.65 times less risky than Total Soft. The stock trades about -0.13 of its potential returns per unit of risk. The Total Soft Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 480,000 in Total Soft Bank on November 5, 2024 and sell it today you would earn a total of 246,000 from holding Total Soft Bank or generate 51.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posco ICT vs. Total Soft Bank
Performance |
| Timeline |
| Posco ICT |
| Total Soft Bank |
Posco ICT and Total Soft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco ICT and Total Soft
The main advantage of trading using opposite Posco ICT and Total Soft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco ICT position performs unexpectedly, Total Soft 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 Total Soft will offset losses from the drop in Total Soft's long position.| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor Co |
| Total Soft vs. Nable Communications | Total Soft vs. Lake Materials Co | Total Soft vs. Korea Information Communications | Total Soft vs. ECSTELECOM 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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