Correlation Between SCI Information and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both SCI Information 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 SCI Information and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Information Service and POSCO Holdings, you can compare the effects of market volatilities on SCI Information 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 SCI Information with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and POSCO Holdings.
Diversification Opportunities for SCI Information and POSCO Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SCI and POSCO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and SCI Information 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 SCI Information Service 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 SCI Information i.e., SCI Information and POSCO Holdings go up and down completely randomly.
Pair Corralation between SCI Information and POSCO Holdings
Assuming the 90 days trading horizon SCI Information Service is expected to under-perform the POSCO Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SCI Information Service is 1.41 times less risky than POSCO Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The POSCO Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 25,350,000 in POSCO Holdings on October 30, 2024 and sell it today you would earn a total of 800,000 from holding POSCO Holdings or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. POSCO Holdings
Performance |
| Timeline |
| SCI Information Service |
| POSCO Holdings |
SCI Information and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and POSCO Holdings
The main advantage of trading using opposite SCI Information and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information 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.| SCI Information vs. Kyeryong Construction Industrial | SCI Information vs. Hanshin Construction Co | SCI Information vs. Camus Engineering Construction | SCI Information vs. Dongwoon Anatech Co |
| POSCO Holdings vs. Leaders Technology Investment | POSCO Holdings vs. Namhae Chemical | POSCO Holdings vs. KTB Investment Securities | POSCO Holdings vs. Dongnam Chemical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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