Correlation Between POSCO Holdings and Accor SA
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Accor SA 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 Accor SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Accor SA, you can compare the effects of market volatilities on POSCO Holdings and Accor SA 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 Accor SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Accor SA.
Diversification Opportunities for POSCO Holdings and Accor SA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between POSCO and Accor is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Accor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor SA 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 Accor SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor SA has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Accor SA go up and down completely randomly.
Pair Corralation between POSCO Holdings and Accor SA
Assuming the 90 days horizon POSCO Holdings is expected to under-perform the Accor SA. In addition to that, POSCO Holdings is 1.68 times more volatile than Accor SA. It trades about -0.2 of its total potential returns per unit of risk. Accor SA is currently generating about 0.1 per unit of volatility. If you would invest 4,031 in Accor SA on August 28, 2024 and sell it today you would earn a total of 236.00 from holding Accor SA or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Accor SA
Performance |
| Timeline |
| POSCO Holdings |
| Accor SA |
POSCO Holdings and Accor SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Accor SA
The main advantage of trading using opposite POSCO Holdings and Accor SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Accor SA 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 Accor SA will offset losses from the drop in Accor SA's long position.| POSCO Holdings vs. Taiwan Semiconductor Manufacturing | POSCO Holdings vs. Selective Insurance Group | POSCO Holdings vs. Insurance Australia Group | POSCO Holdings vs. ZURICH INSURANCE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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