Correlation Between RFTech and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both RFTech 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 RFTech and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFTech Co and POSCO Holdings, you can compare the effects of market volatilities on RFTech 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 RFTech with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and POSCO Holdings.
Diversification Opportunities for RFTech and POSCO Holdings
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RFTech and POSCO is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and RFTech 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 RFTech Co 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 RFTech i.e., RFTech and POSCO Holdings go up and down completely randomly.
Pair Corralation between RFTech and POSCO Holdings
Assuming the 90 days trading horizon RFTech Co is expected to generate 0.78 times more return on investment than POSCO Holdings. However, RFTech Co is 1.28 times less risky than POSCO Holdings. It trades about 0.01 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.08 per unit of risk. If you would invest 385,500 in RFTech Co on September 5, 2024 and sell it today you would earn a total of 2,500 from holding RFTech Co or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RFTech Co vs. POSCO Holdings
Performance |
| Timeline |
| RFTech |
| POSCO Holdings |
RFTech and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RFTech and POSCO Holdings
The main advantage of trading using opposite RFTech and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech 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.The idea behind RFTech Co and POSCO Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| POSCO Holdings vs. LG Chemicals | POSCO Holdings vs. Lotte Chemical Corp | POSCO Holdings vs. Hyundai Steel | POSCO Holdings vs. Dongkuk Steel Mill |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |