Correlation Between FNSTech and POSCO M
Can any of the company-specific risk be diversified away by investing in both FNSTech 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 FNSTech and POSCO M 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 M TECH Co, you can compare the effects of market volatilities on FNSTech 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 FNSTech with a short position of POSCO M. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and POSCO M.
Diversification Opportunities for FNSTech and POSCO M
Poor diversification
The 3 months correlation between FNSTech and POSCO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech 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 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 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 FNSTech i.e., FNSTech and POSCO M go up and down completely randomly.
Pair Corralation between FNSTech and POSCO M
Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.38 times more return on investment than POSCO M. However, FNSTech is 1.38 times more volatile than POSCO M TECH Co. It trades about 0.0 of its potential returns per unit of risk. POSCO M TECH Co is currently generating about -0.1 per unit of risk. If you would invest 1,133,000 in FNSTech Co on August 25, 2024 and sell it today you would lose (229,000) from holding FNSTech Co or give up 20.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.07% |
| Values | Daily Returns |
FNSTech Co vs. POSCO M TECH Co
Performance |
| Timeline |
| FNSTech |
| POSCO M TECH |
FNSTech and POSCO M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and POSCO M
The main advantage of trading using opposite FNSTech and POSCO M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech 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.| FNSTech vs. Samsung Electronics Co | FNSTech vs. Samsung Electronics Co | FNSTech vs. LG Energy Solution | FNSTech vs. SK Hynix |
| POSCO M vs. LG Chemicals | POSCO M vs. POSCO Holdings | POSCO M vs. Lotte Chemical Corp | POSCO M vs. Hyundai Steel |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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