Correlation Between HuMC and Posco Chemical
Can any of the company-specific risk be diversified away by investing in both HuMC 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 HuMC and Posco Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HuMC Co and Posco Chemical Co, you can compare the effects of market volatilities on HuMC 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 HuMC with a short position of Posco Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HuMC and Posco Chemical.
Diversification Opportunities for HuMC and Posco Chemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HuMC and Posco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding HuMC Co and Posco Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco Chemical and HuMC 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 HuMC Co 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 HuMC i.e., HuMC and Posco Chemical go up and down completely randomly.
Pair Corralation between HuMC and Posco Chemical
Assuming the 90 days trading horizon HuMC is expected to generate 3.96 times less return on investment than Posco Chemical. But when comparing it to its historical volatility, HuMC Co is 1.51 times less risky than Posco Chemical. It trades about 0.01 of its potential returns per unit of risk. Posco Chemical Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17,807,400 in Posco Chemical Co on September 13, 2024 and sell it today you would lose (1,247,400) from holding Posco Chemical Co or give up 7.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
HuMC Co vs. Posco Chemical Co
Performance |
| Timeline |
| HuMC |
| Posco Chemical |
HuMC and Posco Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HuMC and Posco Chemical
The main advantage of trading using opposite HuMC and Posco Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HuMC 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.| HuMC vs. Samsung Electronics Co | HuMC vs. Samsung Electronics Co | HuMC vs. LG Energy Solution | HuMC vs. SK Hynix |
| Posco Chemical vs. Dong A Steel Technology | Posco Chemical vs. Netmarble Games Corp | Posco Chemical vs. Guyoung Technology Co | Posco Chemical vs. Hwangkum Steel Technology |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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