Correlation Between POSCO Holdings and Champion Iron
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Champion Iron 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 Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Champion Iron Limited, you can compare the effects of market volatilities on POSCO Holdings and Champion Iron 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 Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Champion Iron.
Diversification Opportunities for POSCO Holdings and Champion Iron
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between POSCO and Champion is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Champion Iron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron Limited 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 Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron Limited has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Champion Iron go up and down completely randomly.
Pair Corralation between POSCO Holdings and Champion Iron
Considering the 90-day investment horizon POSCO Holdings is expected to generate 0.83 times more return on investment than Champion Iron. However, POSCO Holdings is 1.21 times less risky than Champion Iron. It trades about 0.02 of its potential returns per unit of risk. Champion Iron Limited is currently generating about 0.0 per unit of risk. If you would invest 5,264 in POSCO Holdings on August 28, 2024 and sell it today you would earn a total of 129.00 from holding POSCO Holdings or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
POSCO Holdings vs. Champion Iron Limited
Performance |
| Timeline |
| POSCO Holdings |
| Champion Iron Limited |
POSCO Holdings and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Champion Iron
The main advantage of trading using opposite POSCO Holdings and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.The idea behind POSCO Holdings and Champion Iron Limited 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.| Champion Iron vs. Olympic Steel | Champion Iron vs. Mesabi Trust | Champion Iron vs. Universal Stainless Alloy | Champion Iron vs. POSCO 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |