Correlation Between POSCO Holdings and LEGAL GENERAL
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and LEGAL GENERAL 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 LEGAL GENERAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and LEGAL GENERAL, you can compare the effects of market volatilities on POSCO Holdings and LEGAL GENERAL 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 LEGAL GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and LEGAL GENERAL.
Diversification Opportunities for POSCO Holdings and LEGAL GENERAL
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between POSCO and LEGAL is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and LEGAL GENERAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL 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 LEGAL GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGAL GENERAL has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and LEGAL GENERAL go up and down completely randomly.
Pair Corralation between POSCO Holdings and LEGAL GENERAL
Assuming the 90 days horizon POSCO Holdings is expected to under-perform the LEGAL GENERAL. In addition to that, POSCO Holdings is 1.38 times more volatile than LEGAL GENERAL. It trades about -0.01 of its total potential returns per unit of risk. LEGAL GENERAL is currently generating about 0.07 per unit of volatility. If you would invest 278.00 in LEGAL GENERAL on November 6, 2024 and sell it today you would earn a total of 6.00 from holding LEGAL GENERAL or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
POSCO Holdings vs. LEGAL GENERAL
Performance |
| Timeline |
| POSCO Holdings |
| LEGAL GENERAL |
POSCO Holdings and LEGAL GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and LEGAL GENERAL
The main advantage of trading using opposite POSCO Holdings and LEGAL GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, LEGAL GENERAL 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 LEGAL GENERAL will offset losses from the drop in LEGAL GENERAL's long position.| POSCO Holdings vs. NORWEGIAN AIR SHUT | POSCO Holdings vs. Wizz Air Holdings | POSCO Holdings vs. Moneysupermarket Group PLC | POSCO Holdings vs. CHINA TONTINE WINES |
| LEGAL GENERAL vs. UNITED UTILITIES GR | LEGAL GENERAL vs. Planet Fitness | LEGAL GENERAL vs. Cardinal Health | LEGAL GENERAL vs. DeVry Education 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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