Correlation Between Laureate Education and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and POSCO Holdings, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and POSCO Holdings.
Diversification Opportunities for Laureate Education and POSCO Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Laureate and POSCO is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and POSCO Holdings go up and down completely randomly.
Pair Corralation between Laureate Education and POSCO Holdings
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.87 times more return on investment than POSCO Holdings. However, Laureate Education is 1.15 times less risky than POSCO Holdings. It trades about 0.18 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.18 per unit of risk. If you would invest 1,390 in Laureate Education on October 14, 2024 and sell it today you would earn a total of 410.00 from holding Laureate Education or generate 29.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. POSCO Holdings
Performance |
| Timeline |
| Laureate Education |
| POSCO Holdings |
Laureate Education and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and POSCO Holdings
The main advantage of trading using opposite Laureate Education and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. IDP EDUCATION LTD | Laureate Education vs. Strategic Education | Laureate Education vs. Superior Plus Corp | Laureate Education vs. NMI Holdings |
| POSCO Holdings vs. COFCO Joycome Foods | POSCO Holdings vs. TOREX SEMICONDUCTOR LTD | POSCO Holdings vs. Semiconductor Manufacturing International | POSCO Holdings vs. Performance Food Group |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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