Correlation Between Parkland and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Parkland 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 Parkland and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parkland and POSCO Holdings, you can compare the effects of market volatilities on Parkland 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 Parkland with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkland and POSCO Holdings.
Diversification Opportunities for Parkland and POSCO Holdings
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Parkland and POSCO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Parkland and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Parkland 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 Parkland 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 Parkland i.e., Parkland and POSCO Holdings go up and down completely randomly.
Pair Corralation between Parkland and POSCO Holdings
Assuming the 90 days horizon Parkland is expected to generate 0.94 times more return on investment than POSCO Holdings. However, Parkland is 1.06 times less risky than POSCO Holdings. It trades about 0.02 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.01 per unit of risk. If you would invest 2,192 in Parkland on October 22, 2024 and sell it today you would earn a total of 237.00 from holding Parkland or generate 10.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.13% |
| Values | Daily Returns |
Parkland vs. POSCO Holdings
Performance |
| Timeline |
| Parkland |
| POSCO Holdings |
Parkland and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parkland and POSCO Holdings
The main advantage of trading using opposite Parkland and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkland 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.| Parkland vs. Tandy Leather Factory | Parkland vs. EVgo Equity Warrants | Parkland vs. Sally Beauty Holdings | Parkland vs. National Vision Holdings |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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