Correlation Between Major Drilling and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Major Drilling 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 Major Drilling and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and POSCO Holdings, you can compare the effects of market volatilities on Major Drilling 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 Major Drilling with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and POSCO Holdings.
Diversification Opportunities for Major Drilling and POSCO Holdings
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Major and POSCO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Major Drilling 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 Major Drilling Group 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 Major Drilling i.e., Major Drilling and POSCO Holdings go up and down completely randomly.
Pair Corralation between Major Drilling and POSCO Holdings
Assuming the 90 days horizon Major Drilling Group is expected to generate 0.66 times more return on investment than POSCO Holdings. However, Major Drilling Group is 1.51 times less risky than POSCO Holdings. It trades about 0.0 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.01 per unit of risk. If you would invest 605.00 in Major Drilling Group on September 2, 2024 and sell it today you would lose (55.00) from holding Major Drilling Group or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Major Drilling Group vs. POSCO Holdings
Performance |
| Timeline |
| Major Drilling Group |
| POSCO Holdings |
Major Drilling and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and POSCO Holdings
The main advantage of trading using opposite Major Drilling and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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.| Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Vale SA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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