Correlation Between Blue Water and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Blue Water 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 Blue Water and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Water Petroleum and POSCO Holdings, you can compare the effects of market volatilities on Blue Water 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 Blue Water with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Water and POSCO Holdings.
Diversification Opportunities for Blue Water and POSCO Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Blue and POSCO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Blue Water Petroleum and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Blue Water 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 Blue Water Petroleum 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 Blue Water i.e., Blue Water and POSCO Holdings go up and down completely randomly.
Pair Corralation between Blue Water and POSCO Holdings
Given the investment horizon of 90 days Blue Water Petroleum is expected to generate 3.31 times more return on investment than POSCO Holdings. However, Blue Water is 3.31 times more volatile than POSCO Holdings. It trades about 0.0 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.28 per unit of risk. If you would invest 29.00 in Blue Water Petroleum on September 13, 2024 and sell it today you would lose (4.00) from holding Blue Water Petroleum or give up 13.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Blue Water Petroleum vs. POSCO Holdings
Performance |
| Timeline |
| Blue Water Petroleum |
| POSCO Holdings |
Blue Water and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Water and POSCO Holdings
The main advantage of trading using opposite Blue Water and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Water 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.| Blue Water vs. POSCO Holdings | Blue Water vs. Schweizerische Nationalbank | Blue Water vs. Berkshire Hathaway | Blue Water vs. Berkshire Hathaway |
| POSCO Holdings vs. Olympic Steel | POSCO Holdings vs. Universal Stainless Alloy | POSCO Holdings vs. Outokumpu Oyj ADR | POSCO Holdings vs. Ternium SA ADR |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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