Correlation Between SGA Solutions and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both SGA Solutions 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 SGA Solutions and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SGA Solutions CoLtd and POSCO Holdings, you can compare the effects of market volatilities on SGA Solutions 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 SGA Solutions with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGA Solutions and POSCO Holdings.
Diversification Opportunities for SGA Solutions and POSCO Holdings
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SGA and POSCO is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SGA Solutions CoLtd and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and SGA Solutions 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 SGA Solutions CoLtd 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 SGA Solutions i.e., SGA Solutions and POSCO Holdings go up and down completely randomly.
Pair Corralation between SGA Solutions and POSCO Holdings
Assuming the 90 days trading horizon SGA Solutions CoLtd is expected to generate 1.26 times more return on investment than POSCO Holdings. However, SGA Solutions is 1.26 times more volatile than POSCO Holdings. It trades about 0.08 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.01 per unit of risk. If you would invest 47,900 in SGA Solutions CoLtd on November 7, 2024 and sell it today you would earn a total of 1,300 from holding SGA Solutions CoLtd or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SGA Solutions CoLtd vs. POSCO Holdings
Performance |
| Timeline |
| SGA Solutions CoLtd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| POSCO Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SGA Solutions and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SGA Solutions and POSCO Holdings
The main advantage of trading using opposite SGA Solutions and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGA Solutions 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.| SGA Solutions vs. Samsung Electronics Co | SGA Solutions vs. Samsung Electronics Co | SGA Solutions vs. Hyundai Motor Co | SGA Solutions vs. LG Electronics |
| POSCO Holdings vs. Dongil Technology | POSCO Holdings vs. KG Eco Technology | POSCO Holdings vs. Puloon Technology | POSCO Holdings vs. SK Chemicals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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