Correlation Between POSCO Holdings and Companhia
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Companhia 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 Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Companhia de Saneamento, you can compare the effects of market volatilities on POSCO Holdings and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Companhia.
Diversification Opportunities for POSCO Holdings and Companhia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between POSCO and Companhia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Companhia go up and down completely randomly.
Pair Corralation between POSCO Holdings and Companhia
Assuming the 90 days horizon POSCO Holdings is expected to generate 3.05 times less return on investment than Companhia. In addition to that, POSCO Holdings is 1.77 times more volatile than Companhia de Saneamento. It trades about 0.01 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.07 per unit of volatility. If you would invest 877.00 in Companhia de Saneamento on September 1, 2024 and sell it today you would earn a total of 663.00 from holding Companhia de Saneamento or generate 75.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.14% |
| Values | Daily Returns |
POSCO Holdings vs. Companhia de Saneamento
Performance |
| Timeline |
| POSCO Holdings |
| Companhia de Saneamento |
POSCO Holdings and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Companhia
The main advantage of trading using opposite POSCO Holdings and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| POSCO Holdings vs. Vulcan Materials | POSCO Holdings vs. AUST AGRICULTURAL | POSCO Holdings vs. THRACE PLASTICS | POSCO Holdings vs. Sumitomo Mitsui Construction |
| Companhia vs. United Utilities Group | Companhia vs. Guangdong Investment Limited | Companhia vs. Superior Plus Corp | Companhia vs. NMI Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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