Correlation Between System and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both System 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 System and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and POSCO Holdings, you can compare the effects of market volatilities on System 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 System with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and POSCO Holdings.
Diversification Opportunities for System and POSCO Holdings
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between System and POSCO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and System 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 System and Application 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 System i.e., System and POSCO Holdings go up and down completely randomly.
Pair Corralation between System and POSCO Holdings
Assuming the 90 days trading horizon System is expected to generate 1.55 times less return on investment than POSCO Holdings. In addition to that, System is 1.16 times more volatile than POSCO Holdings. It trades about 0.05 of its total potential returns per unit of risk. POSCO Holdings is currently generating about 0.09 per unit of volatility. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. POSCO Holdings
Performance |
| Timeline |
| System and Application |
| POSCO Holdings |
System and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and POSCO Holdings
The main advantage of trading using opposite System and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System 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.| System vs. KPX Green Chemical | System vs. Namhae Chemical | System vs. Youl Chon Chemical | System vs. Hanjin Transportation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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