Correlation Between POSCO Thainox and G J
Can any of the company-specific risk be diversified away by investing in both POSCO Thainox and G J 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 POSCO Thainox and G J into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Thainox Public and G J Steel, you can compare the effects of market volatilities on POSCO Thainox and G J 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 POSCO Thainox with a short position of G J. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Thainox and G J.
Diversification Opportunities for POSCO Thainox and G J
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and GJS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Thainox Public and G J Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G J Steel and POSCO Thainox 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 POSCO Thainox Public are associated (or correlated) with G J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G J Steel has no effect on the direction of POSCO Thainox i.e., POSCO Thainox and G J go up and down completely randomly.
Pair Corralation between POSCO Thainox and G J
Assuming the 90 days trading horizon POSCO Thainox Public is expected to under-perform the G J. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Thainox Public is 2.17 times less risky than G J. The stock trades about -0.05 of its potential returns per unit of risk. The G J Steel is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in G J Steel on November 4, 2024 and sell it today you would lose (1.00) from holding G J Steel or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Thainox Public vs. G J Steel
Performance |
| Timeline |
| POSCO Thainox Public |
| G J Steel |
POSCO Thainox and G J Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Thainox and G J
The main advantage of trading using opposite POSCO Thainox and G J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Thainox position performs unexpectedly, G J 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 G J will offset losses from the drop in G J's long position.| POSCO Thainox vs. Internet Thailand Public | POSCO Thainox vs. Millcon Steel Public | POSCO Thainox vs. G J Steel | POSCO Thainox vs. Italian Thai Development Public |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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