Correlation Between FNSTech and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both FNSTech 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 FNSTech and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and POSCO Holdings, you can compare the effects of market volatilities on FNSTech 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 FNSTech with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and POSCO Holdings.
Diversification Opportunities for FNSTech and POSCO Holdings
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FNSTech and POSCO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and FNSTech 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 FNSTech 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 FNSTech i.e., FNSTech and POSCO Holdings go up and down completely randomly.
Pair Corralation between FNSTech and POSCO Holdings
Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.2 times more return on investment than POSCO Holdings. However, FNSTech is 1.2 times more volatile than POSCO Holdings. It trades about -0.09 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.26 per unit of risk. If you would invest 940,000 in FNSTech Co on September 5, 2024 and sell it today you would lose (95,000) from holding FNSTech Co or give up 10.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. POSCO Holdings
Performance |
| Timeline |
| FNSTech |
| POSCO Holdings |
FNSTech and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and POSCO Holdings
The main advantage of trading using opposite FNSTech and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech 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.| FNSTech vs. Samsung Electronics Co | FNSTech vs. Samsung Electronics Co | FNSTech vs. LG Energy Solution | FNSTech vs. SK Hynix |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |