Correlation Between Computer Modelling and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Computer Modelling 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 Computer Modelling and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Modelling Group and POSCO Holdings, you can compare the effects of market volatilities on Computer Modelling 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 Computer Modelling with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Modelling and POSCO Holdings.
Diversification Opportunities for Computer Modelling and POSCO Holdings
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Computer and POSCO is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Computer Modelling 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 Computer Modelling 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 Computer Modelling i.e., Computer Modelling and POSCO Holdings go up and down completely randomly.
Pair Corralation between Computer Modelling and POSCO Holdings
Assuming the 90 days horizon Computer Modelling Group is expected to generate 1.31 times more return on investment than POSCO Holdings. However, Computer Modelling is 1.31 times more volatile than POSCO Holdings. It trades about -0.13 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.19 per unit of risk. If you would invest 845.00 in Computer Modelling Group on September 13, 2024 and sell it today you would lose (87.00) from holding Computer Modelling Group or give up 10.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Computer Modelling Group vs. POSCO Holdings
Performance |
| Timeline |
| Computer Modelling |
| POSCO Holdings |
Computer Modelling and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Modelling and POSCO Holdings
The main advantage of trading using opposite Computer Modelling and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Modelling 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.| Computer Modelling vs. 01 Communique Laboratory | Computer Modelling vs. LifeSpeak | Computer Modelling vs. RESAAS Services | Computer Modelling vs. RenoWorks Software |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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