Correlation Between POSCO Holdings and Capella Minerals
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Capella Minerals 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 Capella Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Capella Minerals Limited, you can compare the effects of market volatilities on POSCO Holdings and Capella Minerals 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 Capella Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Capella Minerals.
Diversification Opportunities for POSCO Holdings and Capella Minerals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Capella is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Capella Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capella Minerals 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 Capella Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capella Minerals has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Capella Minerals go up and down completely randomly.
Pair Corralation between POSCO Holdings and Capella Minerals
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the Capella Minerals. In addition to that, POSCO Holdings is 1.08 times more volatile than Capella Minerals Limited. It trades about -0.16 of its total potential returns per unit of risk. Capella Minerals Limited is currently generating about -0.14 per unit of volatility. If you would invest 0.74 in Capella Minerals Limited on August 25, 2024 and sell it today you would lose (0.07) from holding Capella Minerals Limited or give up 9.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Capella Minerals Limited
Performance |
| Timeline |
| POSCO Holdings |
| Capella Minerals |
POSCO Holdings and Capella Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Capella Minerals
The main advantage of trading using opposite POSCO Holdings and Capella Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Capella Minerals 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 Capella Minerals will offset losses from the drop in Capella Minerals' long position.| POSCO Holdings vs. Olympic Steel | POSCO Holdings vs. Universal Stainless Alloy | POSCO Holdings vs. Outokumpu Oyj ADR | POSCO Holdings vs. Ternium SA ADR |
| Capella Minerals vs. Morningstar Unconstrained Allocation | Capella Minerals vs. High Yield Municipal Fund | Capella Minerals vs. Knife River | Capella Minerals vs. Klckner Co SE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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