Correlation Between Xavis and Posco ICT
Can any of the company-specific risk be diversified away by investing in both Xavis and Posco ICT 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 Xavis and Posco ICT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and Posco ICT, you can compare the effects of market volatilities on Xavis and Posco ICT 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 Xavis with a short position of Posco ICT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and Posco ICT.
Diversification Opportunities for Xavis and Posco ICT
Very poor diversification
The 3 months correlation between Xavis and Posco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and Posco ICT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco ICT and Xavis 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 Xavis Co are associated (or correlated) with Posco ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco ICT has no effect on the direction of Xavis i.e., Xavis and Posco ICT go up and down completely randomly.
Pair Corralation between Xavis and Posco ICT
Assuming the 90 days trading horizon Xavis Co is expected to under-perform the Posco ICT. But the stock apears to be less risky and, when comparing its historical volatility, Xavis Co is 1.32 times less risky than Posco ICT. The stock trades about -0.41 of its potential returns per unit of risk. The Posco ICT is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 2,685,000 in Posco ICT on August 31, 2024 and sell it today you would lose (450,000) from holding Posco ICT or give up 16.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. Posco ICT
Performance |
| Timeline |
| Xavis |
| Posco ICT |
Xavis and Posco ICT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and Posco ICT
The main advantage of trading using opposite Xavis and Posco ICT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis position performs unexpectedly, Posco ICT 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 ICT will offset losses from the drop in Posco ICT's long position.The idea behind Xavis Co and Posco ICT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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