Correlation Between RFTech and POSCO M
Can any of the company-specific risk be diversified away by investing in both RFTech and POSCO M 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 M 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 M TECH Co, you can compare the effects of market volatilities on RFTech and POSCO M 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 M. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and POSCO M.
Diversification Opportunities for RFTech and POSCO M
Modest diversification
The 3 months correlation between RFTech and POSCO is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and POSCO M TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO M TECH 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 M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO M TECH has no effect on the direction of RFTech i.e., RFTech and POSCO M go up and down completely randomly.
Pair Corralation between RFTech and POSCO M
Assuming the 90 days trading horizon RFTech Co is expected to generate 0.66 times more return on investment than POSCO M. However, RFTech Co is 1.51 times less risky than POSCO M. It trades about 0.34 of its potential returns per unit of risk. POSCO M TECH Co is currently generating about -0.17 per unit of risk. If you would invest 289,000 in RFTech Co on August 29, 2024 and sell it today you would earn a total of 41,500 from holding RFTech Co or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RFTech Co vs. POSCO M TECH Co
Performance |
| Timeline |
| RFTech |
| POSCO M TECH |
RFTech and POSCO M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RFTech and POSCO M
The main advantage of trading using opposite RFTech and POSCO M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech position performs unexpectedly, POSCO M 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 M will offset losses from the drop in POSCO M's long position.| RFTech vs. Daou Technology | RFTech vs. Ssangyong Information Communication | RFTech vs. Digital Power Communications | RFTech vs. Sangsin Energy Display |
| POSCO M vs. LG Chemicals | POSCO M vs. Lotte Chemical Corp | POSCO M vs. Hyundai Steel | POSCO M vs. Seah Steel Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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