Correlation Between POSCO Holdings and BAIC MotorLimited

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and BAIC MotorLimited 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 BAIC MotorLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and BAIC Motor, you can compare the effects of market volatilities on POSCO Holdings and BAIC MotorLimited 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 BAIC MotorLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and BAIC MotorLimited.

Diversification Opportunities for POSCO Holdings and BAIC MotorLimited

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between POSCO and BAIC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and BAIC Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIC MotorLimited 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 BAIC MotorLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIC MotorLimited has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and BAIC MotorLimited go up and down completely randomly.

Pair Corralation between POSCO Holdings and BAIC MotorLimited

Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the BAIC MotorLimited. In addition to that, POSCO Holdings is 1.06 times more volatile than BAIC Motor. It trades about -0.23 of its total potential returns per unit of risk. BAIC Motor is currently generating about 0.19 per unit of volatility. If you would invest  27.00  in BAIC Motor on September 1, 2024 and sell it today you would earn a total of  3.00  from holding BAIC Motor or generate 11.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

POSCO Holdings  vs.  BAIC Motor

 Performance 
       Timeline  
POSCO Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days POSCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
BAIC MotorLimited 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in BAIC Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, BAIC MotorLimited reported solid returns over the last few months and may actually be approaching a breakup point.

POSCO Holdings and BAIC MotorLimited Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with POSCO Holdings and BAIC MotorLimited

The main advantage of trading using opposite POSCO Holdings and BAIC MotorLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, BAIC MotorLimited 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 BAIC MotorLimited will offset losses from the drop in BAIC MotorLimited's long position.
The idea behind POSCO Holdings and BAIC Motor 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.
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Transaction History
View history of all your transactions and understand their impact on performance
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Equity Valuation
Check real value of public entities based on technical and fundamental data