Correlation Between POSCO Holdings and Westwater Resources
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Westwater Resources 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 Westwater Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Westwater Resources, you can compare the effects of market volatilities on POSCO Holdings and Westwater Resources 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 Westwater Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Westwater Resources.
Diversification Opportunities for POSCO Holdings and Westwater Resources
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between POSCO and Westwater is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Westwater Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwater Resources 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 Westwater Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwater Resources has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Westwater Resources go up and down completely randomly.
Pair Corralation between POSCO Holdings and Westwater Resources
Assuming the 90 days horizon POSCO Holdings is expected to under-perform the Westwater Resources. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.18 times less risky than Westwater Resources. The stock trades about -0.12 of its potential returns per unit of risk. The Westwater Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Westwater Resources on September 20, 2024 and sell it today you would earn a total of 3.00 from holding Westwater Resources or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
POSCO Holdings vs. Westwater Resources
Performance |
| Timeline |
| POSCO Holdings |
| Westwater Resources |
POSCO Holdings and Westwater Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Westwater Resources
The main advantage of trading using opposite POSCO Holdings and Westwater Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Westwater Resources 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 Westwater Resources will offset losses from the drop in Westwater Resources' long position.| POSCO Holdings vs. Reliance Steel Aluminum | POSCO Holdings vs. Superior Plus Corp | POSCO Holdings vs. SIVERS SEMICONDUCTORS AB | POSCO Holdings vs. Norsk Hydro ASA |
| Westwater Resources vs. Zoom Video Communications | Westwater Resources vs. CHINA TELECOM H | Westwater Resources vs. Natural Health Trends | Westwater Resources vs. SHIP HEALTHCARE HLDGINC |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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