Correlation Between POSCO Holdings and Toro

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Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Toro 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 Toro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Toro Co, you can compare the effects of market volatilities on POSCO Holdings and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Toro.

Diversification Opportunities for POSCO Holdings and Toro

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between POSCO and Toro is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Toro go up and down completely randomly.

Pair Corralation between POSCO Holdings and Toro

Assuming the 90 days horizon POSCO Holdings is expected to under-perform the Toro. In addition to that, POSCO Holdings is 1.14 times more volatile than Toro Co. It trades about -0.08 of its total potential returns per unit of risk. Toro Co is currently generating about 0.02 per unit of volatility. If you would invest  7,618  in Toro Co on September 4, 2024 and sell it today you would earn a total of  530.00  from holding Toro Co or generate 6.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.6%
ValuesDaily Returns

POSCO Holdings  vs.  Toro Co

 Performance 
       Timeline  
POSCO Holdings 

Risk-Adjusted Performance

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Over the last 90 days POSCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Toro 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Toro Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Toro is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

POSCO Holdings and Toro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with POSCO Holdings and Toro

The main advantage of trading using opposite POSCO Holdings and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro's long position.
The idea behind POSCO Holdings and Toro Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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.

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