Correlation Between Alton Sports and Posco Chemical
Can any of the company-specific risk be diversified away by investing in both Alton Sports and Posco Chemical 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 Alton Sports and Posco Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and Posco Chemical Co, you can compare the effects of market volatilities on Alton Sports and Posco Chemical 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 Alton Sports with a short position of Posco Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Posco Chemical.
Diversification Opportunities for Alton Sports and Posco Chemical
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alton and Posco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Posco Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco Chemical and Alton Sports 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 Alton Sports CoLtd are associated (or correlated) with Posco Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco Chemical has no effect on the direction of Alton Sports i.e., Alton Sports and Posco Chemical go up and down completely randomly.
Pair Corralation between Alton Sports and Posco Chemical
Assuming the 90 days trading horizon Alton Sports CoLtd is expected to under-perform the Posco Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Alton Sports CoLtd is 1.67 times less risky than Posco Chemical. The stock trades about -0.17 of its potential returns per unit of risk. The Posco Chemical Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 34,272,500 in Posco Chemical Co on September 3, 2024 and sell it today you would lose (16,672,500) from holding Posco Chemical Co or give up 48.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alton Sports CoLtd vs. Posco Chemical Co
Performance |
| Timeline |
| Alton Sports CoLtd |
| Posco Chemical |
Alton Sports and Posco Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alton Sports and Posco Chemical
The main advantage of trading using opposite Alton Sports and Posco Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports position performs unexpectedly, Posco Chemical 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 Chemical will offset losses from the drop in Posco Chemical's long position.| Alton Sports vs. Korea Information Communications | Alton Sports vs. Korean Reinsurance Co | Alton Sports vs. Lotte Non Life Insurance | Alton Sports vs. Sempio Foods Co |
| Posco Chemical vs. Lotte Chilsung Beverage | Posco Chemical vs. SCI Information Service | Posco Chemical vs. Handok Clean Tech | Posco Chemical vs. Samyang Foods 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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