Correlation Between POSCO Holdings and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Sumitomo Rubber 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 Holdings and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Sumitomo Rubber Industries, you can compare the effects of market volatilities on POSCO Holdings and Sumitomo Rubber 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 Holdings with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Sumitomo Rubber.
Diversification Opportunities for POSCO Holdings and Sumitomo Rubber
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between POSCO and Sumitomo is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and POSCO Holdings 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 Holdings are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between POSCO Holdings and Sumitomo Rubber
Assuming the 90 days horizon POSCO Holdings is expected to generate 1.23 times more return on investment than Sumitomo Rubber. However, POSCO Holdings is 1.23 times more volatile than Sumitomo Rubber Industries. It trades about -0.06 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about -0.14 per unit of risk. If you would invest 4,340 in POSCO Holdings on October 19, 2024 and sell it today you would lose (100.00) from holding POSCO Holdings or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
POSCO Holdings vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| POSCO Holdings |
| Sumitomo Rubber Indu |
POSCO Holdings and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Sumitomo Rubber
The main advantage of trading using opposite POSCO Holdings and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Sumitomo Rubber 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 Sumitomo Rubber will offset losses from the drop in Sumitomo Rubber's long position.| POSCO Holdings vs. United Rentals | POSCO Holdings vs. Air Lease | POSCO Holdings vs. KOBE STEEL LTD | POSCO Holdings vs. RELIANCE STEEL AL |
| Sumitomo Rubber vs. CANON MARKETING JP | Sumitomo Rubber vs. SALESFORCE INC CDR | Sumitomo Rubber vs. SIDETRADE EO 1 | Sumitomo Rubber vs. Taiwan Semiconductor Manufacturing |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |