Correlation Between Posco ICT and Alchera
Can any of the company-specific risk be diversified away by investing in both Posco ICT and Alchera 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 Alchera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco ICT and Alchera, you can compare the effects of market volatilities on Posco ICT and Alchera 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 Alchera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco ICT and Alchera.
Diversification Opportunities for Posco ICT and Alchera
Very good diversification
The 3 months correlation between Posco and Alchera is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Posco ICT and Alchera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchera 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 Alchera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchera has no effect on the direction of Posco ICT i.e., Posco ICT and Alchera go up and down completely randomly.
Pair Corralation between Posco ICT and Alchera
Assuming the 90 days trading horizon Posco ICT is expected to generate 0.88 times more return on investment than Alchera. However, Posco ICT is 1.14 times less risky than Alchera. It trades about 0.08 of its potential returns per unit of risk. Alchera is currently generating about -0.05 per unit of risk. If you would invest 2,235,000 in Posco ICT on November 27, 2024 and sell it today you would earn a total of 350,000 from holding Posco ICT or generate 15.66% 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. Alchera
Performance |
| Timeline |
| Posco ICT |
| Alchera |
Posco ICT and Alchera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco ICT and Alchera
The main advantage of trading using opposite Posco ICT and Alchera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco ICT position performs unexpectedly, Alchera 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 Alchera will offset losses from the drop in Alchera's long position.| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor Co |
| Alchera vs. Shinsegae Food | Alchera vs. FOODWELL Co | Alchera vs. Seoul Food Industrial | Alchera vs. GS Retail 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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