Correlation Between POSCO Holdings and SCG PACKAGING
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and SCG PACKAGING 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 SCG PACKAGING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and SCG PACKAGING FGN , you can compare the effects of market volatilities on POSCO Holdings and SCG PACKAGING 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 SCG PACKAGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and SCG PACKAGING.
Diversification Opportunities for POSCO Holdings and SCG PACKAGING
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POSCO and SCG is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and SCG PACKAGING FGN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCG PACKAGING FGN 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 SCG PACKAGING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCG PACKAGING FGN has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and SCG PACKAGING go up and down completely randomly.
Pair Corralation between POSCO Holdings and SCG PACKAGING
Assuming the 90 days horizon POSCO Holdings is expected to under-perform the SCG PACKAGING. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.02 times less risky than SCG PACKAGING. The stock trades about -0.29 of its potential returns per unit of risk. The SCG PACKAGING FGN is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 68.00 in SCG PACKAGING FGN on September 3, 2024 and sell it today you would lose (10.00) from holding SCG PACKAGING FGN or give up 14.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. SCG PACKAGING FGN
Performance |
| Timeline |
| POSCO Holdings |
| SCG PACKAGING FGN |
POSCO Holdings and SCG PACKAGING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and SCG PACKAGING
The main advantage of trading using opposite POSCO Holdings and SCG PACKAGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, SCG PACKAGING 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 SCG PACKAGING will offset losses from the drop in SCG PACKAGING's long position.| POSCO Holdings vs. ArcelorMittal | POSCO Holdings vs. NIPPON STEEL SPADR | POSCO Holdings vs. Reliance Steel Aluminum |
| SCG PACKAGING vs. Indorama Ventures PCL | SCG PACKAGING vs. PTT GLBL CHEM NVDR | SCG PACKAGING vs. Intouch Holdings Public | SCG PACKAGING vs. Bangkok Bank Public |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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